Which of the following statements is CORRECT? a. The reported income of two otherwise identical firms cannot be manipulated by different accounting procedures provided the firms follow generally accepted accounting principles (GAAP). b. The reported income of two otherwise identical firms must be identical if the firms are publicly owned, provided they follow procedures that are permitted by the Securities and Exchange Commission (SEC). c. If a firm follows generally accepted accounting principles (GAAP), then its reported net income will be identical to its reported cash flow. d. The income statement for a given year is designed to give us an idea of how much the firm earned during that year. e. The focal point of the income statement is the cash account because that account cannot be manipulated by "accounting tricks."

Areview of the ledger of sheridan company at december 31, 2017, produces these data pertaining to the preparation of annual adjusting entries. 1. prepaid insurance $19,661. the company has separate insurance policies on its buildings and its motor vehicles. policy b4564 on the building was purchased on july 1, 2016, for $13,290. the policy has a term of 3 years. policy a2958 on the vehicles was purchased on january 1, 2017, for $8,586. this policy has a term of 18 months. 2. unearned rent revenue $468,720. the company began subleasing office space in its new building on november 1. at december 31, the company had the following rental contracts that are paid in full for the entire term of the lease. term (in months) number of leases date monthly rent nov. 1 8 $5,450 6 dec. 1 6 $8,630 4 3. notes payable $43,200. this balance consists of a note for 6 months at an annual interest rate of 7%, dated october 1. 4. salaries and wages payable $0. there are 9 salaried employees. salaries are paid every friday for the current week. 6 employees receive a salary of $620 each per week, and 3 employees earn $755 each per week. assume december 31 is a wednesday. employees do not work weekends. all employees worked the last 3 days of december. prepare the adjusting entries at december 31,2017.