During the year ended March 29, 2014, Indigo Books & Music Inc. (Indigo) recorded numerous accruals and deferrals. As a long-term employee of Indigo's accounting and finance staff, it is your job to explain the effects of accruals and deferrals on Indigo's financial statements. (Indigo's financial statements appear in Appendix A at the end of this book and on MyAccountingLab.) Suppose the following questions were raised at the shareholders' meeting:
1. "Prepaid expenses" in the amount of $5,184,000 are listed on the March 29, 2014, balance sheet. What items could be included in this balance, and why is this account listed as a balance sheet account instead of an expense account?
2. The balance sheet lists "Cash and cash equivalents" of $157,578,000. Look at Note 6 to see what is included in this amount.
3. "Accounts payable and accrued liabilities" is shown on the balance sheet in the amount of $136,428,000. Define an accrued liability and give an example of items that could be included in this liability.
4. What is "depreciation" and how much depreciation has been recorded so far for the computer equipment at March 29, 2014?