The financial statements of Hershey Foods are presented in Appendix B, following the financial statements for Tootsie Roll in Appendix A.

Instructions

(a) Identify two accounts on Hershey Foods’ balance sheet that provide evidence that Hershey uses accrual accounting. In each case, identify the income statement account that would be affected by the adjustment process.

(b) Identify two accounts on Tootsie Roll’s balance sheet that provide evidence that Tootsie Roll uses accrual accounting (different from the two you listed for Hershey).

In each case, identify the income statement account that would be affected by the adjustment process.

RESEARCH CASE