Question 1: State two generally accepted accounting principles that relate to adjusting the accounts.
Question 2: Rick Marsh, a lawyer, accepts a legal engagement in March, performs the work in April, and is paid in May. If Marsh law firm prepares monthly financial statements, when should it recognize revenue from this engagement? Why?
Question 3: Why do accrual-basis financial statements provide more useful information than cash-basis statements?
Question 4: Distinguish between the two categories of adjusting entries, and identify the types of adjustments applicable to each category.