1. When are revenues to be recorded under the revenue recognition principle? When are expenses to be recorded under the matching principle?

2. Susan Zupan, a lawyer, accepts a legal engagement in March, performs the work in April, and is paid in May. If Zupan's law firm prepares monthly financial statements, when should it recognize revenue from this engagement? Why? 3. In completing the engagement in question

3, Zupan pays no costs in March, $2,000 in April, and $2,500 in May (incurred in April). How much expense should the firm deduct from revenues in the month when it recognizes the revenue? Why?

4. Why are adjusting entries necessary?

5. "Depreciation is a valuation process that results in the reporting of the fair market value of the asset." Do you agree?