Discussion: Financial Condition
• For this discussion, assume the role of a financial manager in a company, and assume that you have just hired a new bookkeeper to join your team. You want to assess the new hire's understanding of the accounting processes as a whole, so you decide to ask a series of questions. Select three of the six questions listed below to ask your new bookkeeper, and describe the response you expect to hear:
o Define the accounting cycle.
o Explain the revenue principle and its implication on the financial statements.
o Define the matching principle and why it is critical in the preparation of the accrual-based financial statements.
o Compare and contrast a prepaid account and a deferred account. Give an example of each and how each affects the financial statements.
o Define and differentiate between the purpose of a journal entry, an adjusting entry, and a closing entry.
o Define the difference between a trial balance and a post-closing trial balance.