Franklin Company Began Business in 2013 and Has Consistently Used

question 25

True/False

Franklin Company began business in 2013 and has consistently used the cash method to report income from the sale of inventory in income tax returns filed for 2013 through 2017. As a result of an audit by the IRS, Franklin was required to change to the accrual method of accounting beginning with 2018. The net adjustment due to the change is a positive adjustment to income. The adjustment may be spread equally over 2018 and the three following years.

Understand the accounting treatment for disposal of plant assets.

Recognize the importance of the expense recognition principle in relation to depreciation.

Understand the concept of book value and how it differs from fair market value.

Learn the accounting treatments for natural resources including depletion.

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Definitions:

Sleep Cycle

The progression through various stages of sleep including REM (rapid eye movement) and non-REM sleep, repeating cyclically throughout a typical night's rest.

Minutes

A written record of what was said and decided during a meeting.

Inattentional Blindness

The phenomenon where an individual fails to perceive an unexpected stimulus in plain sight due to focusing attention on another task, event, or object.

Hallucination

A perception in the absence of external stimulus that has qualities of real perception, often affecting the senses of sight and hearing.