Question

the net income reported on the income statement is 78,000. however adjusting entries have not been made at the end of the period for depreciation expense of 5,000 accrued salaries of 1,300, unearned rent earned during the period of 7,000. Net income as corrected is:

a. 78,700

b.78,000

c.85,000

d/71,700

which of the following accounting principles would require that economic data be limited to date directly related to the activities of a particular business

a. business entity

b. going concern

c. historical cost

d. revenue recognition

Answer 1

Solution: 1

Option a. 78,700 is the correct answer.

Working:

Unadjusted Net Income	$78,000
Less: Depreciation Expense	($5,000)
Less: Salaries Expense	($1,300)
Add: Rent Revenue	$7,000
Adjusted Net Income	$78,700

Solution: 2

Answer - Option (a) "Business Entity" is the correct Option

Explaination:

Under Business Entity Concept the economica accounting data which are directly relate to a particular business or specific business are limited.

Wherease Going concern means business will continue its operatin in future, So it is (False)

in Historical cost asset is recorded in balance sheet by ts original value so it is ( False)

In revenue recognition means revenue will recogniz in the period in which it is earned , so it (False)

Therefore

"Business Entity" is the correct Option