Explain the time period assumption. sangled E3.2 (LO 1) Chloe Davis has prepared the following list of statements about the time period assumption. 1. Adjusting entries would not be necessary if a company's life were not divided into artificial time di periods. vellon 90 a 11 poimene Infonet Viitoni Estong ito 2. Taxing authorities require companies to file annual tax returns. wo ynsamos sri, 18 viul 1A 3. Accountants divide the economic life of a business into artificial time periods, but each transaction affects only one of these periods. 4. Accounting time periods are generally a month, a quarter, or a year. 5. A time period lasting one year is called an interim period. years laulbs edi q hite b 6. All fiscal years are calendar years, but not all calendar years are fiscal years. Instructions up OrgdiM Identify each statement as true or false. If false, indicate how to correct the statement. the C-

Explain the time period assumption. E3.2 (LO 1) Chloe Davis has prepared the following list of statements about the time period assumption. 1. Adjusting entries would not be necessary if a company's life were not divided into artificial time periods. 2. Taxing authorities require companies to file annual tax returns. 3. Accountants divide the economic life of a business into artificial time periods, but cach transaction affects only one of these periods. 4. Accounting time periods are generally a month, a quarter, or a year. 5. A time period lasting one year is called an interim period. 6. All fiscal years are calendar years, but not all calendar years are fiscal years. Instructions Identify each statement as true or false. If false, indicate how to correct the statement. E3.4 (LO 1) Carillo Painting collected f108,000 from customers in 2025. Of the amount collected, 25,000 was for services performed in 2024. In addition, Carillo performed services worth 36,000 in 2025 , which will not be collected until 2026. Compute cash and accrual accovinting income. Carillo Painting also paid $72,000 for expenses in 2025 . Of the amount paid, f30,000 was for expenses incurred on account in 2024. In addition, Carillo incurred 842,000 of expenses in 2025 , which will not be paid until 2026. Instructions a. Compute 2025 cash-basis net income, b. Compute 2025 accrual-basis net income. Identify types of adjustments and account relationships. E3.7 (LO 2, 3) Orwell Surf Shop accumulates the following adjustment data at December 31. 1. Services performed but unbilled total 3,000. 2. Supplies of 300 have been used. 3. Utilities expenses of es52 are unpaid. 4. Services performed of 260 collected in advance. 5. Salaries of e800 are unpaid. 6. Prepaid insurance totaling e350 has expired. Instructions For each of the above items indicate the following. a. The type of adjustment (prepaid expense, uncarned revenue, accrued revenue, or accrued expense) b. The status of accounts before adjustment (overstatement or understatement). Prepare adjusting entries. E3.10 (LO 2, 3) The trial balance for Yazici Advertising A.S., is shown in Illustration 3.4. Instead of the adjusting entries shown in the text at October 31 , assume the following adjustment data. 1. Supplies on hand at October 31 total t500. 2. Expired insurance for the month is t120. 3. Depreciation for the month is t50. 4. Services related to unearned service revenue in October worth t600 were performed. 5. Services performed but not recorded at October 31 are $360. 6. Interest accrued at October 31 is t 95 . 7. Accrued salaries at October 31 are t1,625. E3.11 (LO 1, 2, 3, 4) The income statement of Bjorn ASA for the month of July shows net income of Prepare correct income statement. 1,400 based on Service Revenue 5,500, Salaries and Wages Expense 2,300, Supplies Expense 1,200, and Utilities Expense 6600 . In reviewing the statement, you discover the following. 1. Insurance expired during July of 500 was omitted. 2. Supplies expense includes 250 of supplies that are still on hand at July 31 . 3. Depreciation on equipment of 150 was omitted. 4. Accrued but unpaid salaries and wages at July 31 of 400 were not included. 5. Services performed but unrecorded totaled 6650 . Instructions Prepare a correct income statement for July 2025