Question

Match each situation below to two applicable reasons that require an adjustment to be made. Revenue has been generated. Expense has been incurred. Liability has been incurred. Liability has been fulfilled. Asset has been acquired. Asset has been used up.

Situation Reasons 1. IBM completed a consulting project for the CDC to simulate the spread of contagious viruses and will be paid next month. 2. This month Apple, Inc., redeemed iTunes gift cards that had been issued last month. A, D 3. Schutt Sports used up some of the benefits of its football helmet manufacturing equipment. 4. Procter & Gamble received a bill for this month’s advertising services, which it will pay next month.

Answer 1

situation	reasons	remarks
1.IBM completed a consulting project for CDC to simulate the spread of contagious viruses and will be paid next month	A, E	revenue is generated, asset in form of accounts receivable is acquired
2. . This month Apple, Inc., redeemed iTunes gift cards that had been issued last month.	A,D	Revenue is generated when gift cards are redeemed and Liability in form of gift cards is full filled.
3.Schutt Sports used up some of the benefits of its football helmet manufacturing equipment.	B, F	Expense in form of depreciation can be incurred, asset which is equipment is used up
4. Procter & Gamble received a bill for this month’s advertising services, which it will pay next month.	B,C	expenditure in form of advertising expenses has been incurred, liability in form of accounts payable has been incurred.