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2 Feb 2018

Why are adjustments required in accounting records? Do adjustingentries correct the income statement or the balance sheet? Give anexample of an accrual adjustment and explain the adjustmentprocess. Your accrual example should include a sample journalentry. Give an example of a deferral and explain the adjustmentprocess. Your deferral example should include a samplejournal entry. Be complete, address all of the points in this leadquestion.

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Casey Durgan
Casey DurganLv2
4 Feb 2018
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Access the latest annual report, or Form 10-K, of a publicly-traded company of your choice(coca cola) using the company’s website or www.sec.gov. You can usually access from a company’s website by clicking on investor relations, then annual reports, and search for latest form 10K. From the SEC website (www.sec.gov), search for the selected company’s name and then search for its latest form 10-K. Using form 10-K of your selected company, answer the following questions in an essay format.

Identify three accounts on your selected company’s and balance sheet that provide evidence that the company utilizes accrual accounting. Ensure you provide explanations as well as the income statement account that would be affected by the adjustment process.

Identify and explain three income statement accounts that may result in accrual and deferrals adjusting entries. Explain depreciation expense, amortization expense, accumulated depreciation, and accumulated amortization? In the financial statements and notes of your selected company, identify the four accounts. How much was each of these four accounts for the most recent year and on which financial statements were each reported? What are income taxes and income tax expense (or provision for income taxes)?

In the financial statements and notes of your selected company, identify cash paid for income taxes as well as income tax expense (or provision for income taxes). How much was each of these accounts for the most recent year and on which financial statements was each reported?

Your response should include two to three pages of written text in addition to any calculations and solutions you offer to support your thinking. Ensure you include the form 10-K page numbers in your citations for each response. Include retrieval link for the 10-K as one of your sources so your instructor can verify the information. Document formatting and any citations should conform to APA

For this discussion, assume the role of a financial manager in acompany, and assume that you have just hired a new bookkeeper tojoin your team. You want to assess the new hire's understanding ofthe accounting processes as a whole, so you decide to ask a seriesof questions. Select three of the six questions listed below to askyour new bookkeeper, and describe the response you expect tohear:

Define the accounting cycle.

Explain the revenue principle and its implication on thefinancial statements.

Define the matching principle and why it is critical in thepreparation of the accrual-based financial statements.

Compare and contrast a prepaid account and a deferred account.Give an example of each and how each affects the financialstatements.

Define and differentiate between the purpose of a journal entry,an adjusting entry, and a closing entry.

Define the difference between a trial balance and a post-closingtrial balance.

You have recently been hired by Jones & Co, a small publicaccounting firm as an internal auditor. One of the firm's partners,Joe Jones, has asked you to deal with an unhappy client. Theclient, Susan Swan, is the owner of the city's largest jewelrystore, DiamondsRUs.

Ms Swan wants to remodel her store and is applying for $80,000loan with Planters National Bank. The bank requires the use ofaccrual basis accounting for financial statements. MsSwan insists that she has always used cash basis accounting for herjewelry store. She does not see the purpose of using accrual basisaccounting and refuses to make year-end adjusting entries.

Required:

Write a (friendly) email to Ms Swan to include thefollowing:

1. Explain the main differences between cash basis and accrualbasis accounting.

2. Explain what is the FASB and why it requires the use of theaccrual basis accounting for financial external reporting.

3. Explain why year-end adjusting entries are necessary inaccrual accounting.

Please use proper format. Your email should include anintroduction and proper closing along with 2-3 paragraphs toexplain the main points (1-3) above.

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