The Accrual Basis of Accounting: The accrual basis of accounting requires that revenues be recognized (recorded) when earned and expenses must be recognized (recorded) when incurred and in the same time period that revenue, earned as a result of those expenses, is recorded. . 1. Why does matching revenues and expenses in the same year matter so much? How do the adjusting entries you learned about in Chapter 5 support the concept of matching expenses with revenues? 2. What would happen to the income statement if the books were never closed? Note: The accrual basis of accounting is more fully explained in your textbook at the bottom of Page 416. By Sunday March 8, 2020 at 11:59 p.m. Part A Please write a short paragraph in answer to question #1 above. Your paragraph should show careful thought and analysis of what would happen if no effort was made to match expenses with revenues earned in the same accounting period. To illustrate your discussion, assume $1,800 of supplies were purchased during the accounting period. At the end of the accounting period, a count of supplies shows $700 of supplies on hand. Your paragraph should include a discussion of the effect on the balance sheet and income statement if no adjustment was made to record supplies used during the period. Use the words "overstated and understated" to explain the effect on assets, expenses and net income. Part B Please write a short paragraph in answer to question #2 above. Your paragraph should show careful thought and analysis of what would happen to the income statement if the books were never closed. To illustrate your discussion, you can assume that XYZ company started business on January 1, 2017 and had the following results of operations for each year. Explain what the income statement for 2019 would look like if the books were never closed. ES NAS 2017 2018 2019 Revenue $50,000 $78,000 $86,000 Expenses penses 27.000 27.000 52.000 52.000 60.000 Net Income 000 $23.000 $26.000 $26.000 2017 2018