Warren Enterprises, Inc., completed the following selected transactions and prepared these adjusting entries during March:

Mar 1 Prepaid insurance for Mar through May, $1,800.

3 Performed service on account, $2000.

6 Purchased office furniture on account, $900.

8 Paid property tax expense, $700.

12 Purchased office equipment for cash, $1,500.

18 Performed services and received cash, $2,200.

23 Collected $700 on account.

26 Paid the account payable from tile March 6 transaction.

30 Paid salaries expense, $1,400.

31 Recorded au adjusting entry for March insurance expense related to tile March 1 transaction.

31 Recorded an adjusting entry for unearned revenue now earned, $1,100.

Requirements

1. State whether the transaction would increase revenues, decrease revenues, increase expenses, decrease expenses, or have no effect on revenues or expenses. If revenues or expenses are affected, give the amount of the impact on revenues or expenses for March. Use the following format for your answer.

2. Compute March net income or net loss under the accrual basis of accounting.
3. State why the accrual basis of accounting results in an accurate measurement of income?

Transcribed Image Text:

Revenues and Expenses for March $ Effect on Revenues or Expenses Impact on Revenues or Expenses Increase Revenues Date Mar XX $500