Midwest Enterprises made the following entry on December 31, 2012.
|
Interest Expense |
10,000 |
|
|
Interest Payable (To record interest expense due on loan from Anaheim National Bank.) |
10,000 |
What entry would Anaheim National Bank make regarding its outstanding loan to Midwest Enterprises? Explain why this must be the case.
* 15. Distinguish between cash basis accounting and accrualbasis accounting. Why is accrual basis accounting acceptable for most business enterprises and the cash basis unacceptable in the preparation of an income statement and a balance sheet?
* 16. When salaries and wages expense for the year is computed, why are beginning accrued salaries and wages subtracted from, and ending accrued salaries and wages added to, salaries and wages paid during the year?
* 17. List two types of transactions that would receive different accounting treatment using (a) strict cash basis accounting, and (b) a modified cash basis.
* 18. What are reversing entries, and why are they used?
* 19. “A worksheet is a permanent accounting record, and its use is required in the accounting cycle.” Do you agree? Explain.