Review the balance sheet of Best Buy in Appendix A. Identify the liability accounts that require adjust- Cad ment before annual financial statements can be prepared.What would be the effect on the income statement if these liability accounts were not adjusted?

Appendix A:

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Consolidated Balance Sheets $ in millions, except per share amounts Assets Current Assets Cash and cash equivalents Short-term investments Receivables Merchandise inventories Other current assets Total current assets Property and Equipment Land and buildings Leasehold improvements Fixtures and equipment Property under master and capital lease Less accumulated depreciation Net property and equipment Goodwill Tradename Long-Term Investments Other Assets Total Assets February 26, 2005 $ 470 2,878 375 February 28, 2004 $ 245 2,355 343 2,851 2,607 329 174 6,903 5,724 506 484 1,139 861 2,458 2,151 89 78 4,192 3,574 1,728 1,330 2,464 2,244 513 477 40 37 148 226 170 $10,294 $8,652