Discussion Questions and Critical Thinking/Ethical Case 4

1.Worksheets are required in every company's accounting cycle. Agreeor disagree and explainwhy.

2.What is the purpose of adjustingaccounts?

3.What is the relationship of internal transactions to the adjustingprocess?

4.Explain how an adjustment can affect both the income statement and balance sheet. Please give an example.

5.Why do we need the Accumulated Depreciationaccount?

6.Depreciation expense goes on the balance sheet. True or false?Why?

7.Each month the cost of accumulated depreciation grows while the costof equipment goes up. Agree or disagree. Defend yourposition.

8.Define accrued salaries.

9.Why don't the formal financial statements contain debit or creditcolumns?

10.Explain how the financial statements are prepared from theworksheet.

11.Janet Fox, President of Angel Co., went to a tax seminar. One of the speakers at the seminar advised the audience to put off showing expenses until next year because doing so would allow them to take advantage of a new tax law. When Janet returned to the office, she called in her accountant, Frieda O'Riley. She told Frieda to forget about making any adjustments for salaries in the old year so more expenses could be shown in the new year. Frieda told her that putting off these expenses would not follow generally accepted accounting principles. Janet said she should do it anyway. You make the call. Write your specific recommendations to Frieda.