The conceptual framework reminds you that revenues are recognized when earned and not necessarily when collected. Also, expenses are recorded when incurred (used), not necessarily when paid. This is known as accrual accounting.
Bill Smith opened Smith Construction on April 1, 2010. Review the transactions and financial position of Smith Construction for April in the attached Excel worksheet.
- Enter the transactions for May into the accounting equation, calculating new balance after each entry.
- Prepare the Income Statement for the month of May.
- Prepare the Statement of Retained Earnings for the Month of May.
- Prepare the Balance Sheet as of May 31, 2010.
Save your assignment as a Microsoft Excel document.