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R- ac6-1: What is the purpose of deferrals and accruals?
R- ac6-2: What are prepaid expenses? Give examples.
R- ac6-3: What is unearned revenue? Give examples.
R- ac6-4: What accruals related to liabilities are usually necessary?
R- ac6-5: What accruals related to assets or revenuew are usually necessary?
R- ac6-6: Do accruals and deferrals require year end adjusting entries?
R- ac6-7: What happens to deferrals and accruals at the beginning of the year?
- Explain the following statement by using some examples: "The accrual of previously unrecorded revenues is the mirror image of the accrual of previously unrecorded expenses."
- You have just started a program of selling gift certificates at your store. In the first month you sold $1,000 worth and customers redeemed $100 of these certificates for merchandise. Your average gross profit margin is 50%. What should you report as gift certificate revenue and how much gross margin will appear in the income statement?
- A company began business on July 1 and purchased $1,000 in supplies including paper, pens, paper clips, and so on. On December 31, as they prepared their financial statements, the accounting clerk asked how to treat the $1,000 that appeared in the supplies inventory account. What should this clerk do?
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