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The expense recognition principle requires that expenses be matched with revenues.
Answer:
Sales returns and allowances and sales discounts are subtracted from sales in reporting
net sales in the income statement.
Answer:
Natural resources are long-lived productive assets that are extracted in operations and
are replaceable only by an act of nature.
Answer:
Selected information from the comparative financial statements of Fava Company for
the year ended December 31, appears below:
Instructions
Answer the following questions relating to the year ended December 31, 2016. Show
computations.
1> Inventory turnover for 2016 is __________.
2> Times interest earned in 2016 is __________.
3> The debt to assets ratio for 2016 is __________.
4> Accounts receivable turnover for 2016 is __________.
5> Return on assets for 2016 is __________.
Answer:
Prepare adjusting entries for the following transactions. Omit explanations.
1> Depreciation on equipment is $900 for the accounting period.
2> There was no beginning balance of supplies and purchased $500 of supplies during
the period. At the end of the period $150 of supplies were on hand.
3> Prepaid rent had a $1,000 normal balance prior to adjustment. By year end $400 was
unexpired.
Answer:
