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Chapter 14 - Accounting Principles and Reporting Standards
59. Paige Turner Publishing paid cash in advance for a one year insurance policy. According
to the matching principle, Paige Turner Publishing should recognize the policy as insurance
expense
60. Hour Place Clock Repair paid $1,800 cash in advance for a one year insurance policy.
According to the matching principle, if 4 months of the policy has expired by the balance
sheet date, how much should Hour Place Clock Repair report as Prepaid Insurance?
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66. What is meant by the concept of neutrality in accounting?
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68. The income statement shown below was prepared and sent by Jenna Preston, the owner of
Preston Gifts, to several of her creditors. The business is a sole proprietorship that sells
miscellaneous gifts. An accountant for one of the creditors looked over the income statement
and found that it did not conform to generally accepted accounting principles. Using the
following additional information provided by the owner, prepare an income statement in
accordance with generally accepted accounting principles.
Chapter 14 - Accounting Principles and Reporting Standards
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69. The income statement shown below was prepared and sent by Curtis Brown, the owner of
Curt's Crafts, to several of his creditors. The business is a sole proprietorship that sells crafts
and toys. An accountant for one of the creditors looked over the income statement and found
that it did not conform to generally accepted accounting principles. Using the following
additional information provided by the owner, prepare an income statement in accordance
with generally accepted accounting principles.
Chapter 14 - Accounting Principles and Reporting Standards
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70. Carlos Verde owns a small nursery. He recently approached the local bank for a loan to
finance an expansion of his nursery. Carlos prepared the balance sheet given below and
submitted it with his loan application. The balance sheet does not conform to generally
accepted accounting principles. Using the additional information provided by the owner,
prepare a corrected balance sheet in accordance with generally accepted accounting
principles.
Chapter 14 - Accounting Principles and Reporting Standards
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71. Antonio Hanley owns a small automobile service center. He recently approached the local
bank for a loan to finance an expansion of his service center. Antonio prepared the balance
sheet given below and submitted it with his loan application. The balance sheet does not
conform to generally accepted accounting principles. Using the additional information
provided by the owner, prepare a corrected balance sheet in accordance with generally
accepted accounting principles.
