The Unadjusted Trial Balance and the Adjustment Data for Harris

question 12

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The unadjusted trial balance and the adjustment data for Harris Training Institute are given below along with adjusting entry information. If these adjustments are not recorded, what is the impact on net income? Show calculation for net income without the adjustments and net income with the adjustments. Which one gives the most accurate net income? What accounting principles are being violated if the adjustments are not made? Additional information items:
a. The Prepaid Insurance account consists of a payment for a 1 year policy. An analysis of the insurance invoice indicates that one half of the policy has expired by the end of the December 31 year-end.
b. A cash payment for space sublet for 8 months was received on July 1 and was credited to Unearned Rent.
c. Accrued interest expense on the note payable of $1,000 has been incurred but not paid.

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Definitions:

Obsessive-Compulsive Disorder

A mental disorder characterized by recurrent, unwanted thoughts (obsessions) and/or repetitive behaviors (compulsions) that the person feels the urge to perform in response to an obsession.

Antidepressant Drugs

Medications designed to improve symptoms of depression by altering chemical balances within the brain.

Effective

Achieving a desired goal or result in an efficient and impactful manner.

Negative Symptoms

Characteristics associated with a reduction or lack of normal functions, often observed in certain mental health conditions, like schizophrenia.