Exam 2: Financial Reporting Theory

TLR Consulting keep their accounting records using the accrual basis. During 2018, they collected $425,000 from clients. On December 31, 2017 they had accounts receivable of $61,000 and on December 31, 2018 they had accounts receivable of $46,000. Additionally, they had unearned revenues of $7,000. Using the accrual basis of accounting, what did TLR Consulting earn in service fees for 2018?

The FASB and IASB are converged in general recognition principles.

What is the relationship between the point-in-time elements and the period-of-time elements?

Freddie's Fish Store maintains saltwater aquariums for office buildings in Anchorage. The following events occurred during the first two months of 2018. Determine the net income for each month using both the cash and accrual bases. For depreciable items use straight line depreciation with no salvage value. a. In January, Freddie's purchased a new industrial vacuum for cleaning tanks - it is expected to last 5 years, and cost $5,000. b. In January, Freddie's collected $30,000 prepayment for cleaning services to be completed during January and February. c. In February, Freddie's signed a new client, collecting $6,000 for six months of services. d. In February, Freddie's paid its bimonthly utility bill of $500 for two months of utilities. The bill covers the current and prior months. They are always billed this amount and are paid at the end of every two months.

Materially (significantly) large amounts of supplies should be recognized as an expense under which of the following approaches?

Under U.S. GAAP, ________ is an example of a period-of-time element and appears on the ________.