ACCT1115. Review Package - Midterm SOLUTION Fall 2013
|
|
- Bertram Elliott
- 8 years ago
- Views:
Transcription
1 ACCT1115 Review Package - Midterm SOLUTION Fall 2013
2 Part I Multiple Choice 1) How should you record the purchase of an expensive automobile? a) Decrease cash, increase assets b) Decrease cash, increase expenses c) Decrease cash, decrease net worth d) Decrease cash, increase net worth 2) Which of the following businesses would be considered a service business? a) Paper manufacturer b) Retail store c) Law firm d) None of the available choices 3) Controls: a) are a system of rules that govern international businesses b) include procedures that are used to check and regulate business operations systematically c) are financial goals that a business works towards d) none of the choices 4) A business commences with owner's equity of $60,000 and a cash balance of $15,000 on September 1st. On the last day of September, the business prepays a maintenance contract of $12,000 for a one year service contract that will commence in October. The services will be delivered in equal amounts each month. Assuming no other transactions, what will be the value of cash and owners equity at the end of December? a) Cash $3,000. Equity $57,000 b) Cash $13,000. Equity $60,000 c) Cash $3,000. Equity $45,000 d) Cash $13,000. Equity $57,000 5) Company ABC has not recognized $300 worth of prepaid insurance used at the end of its fiscal year. What happens to net income? a) Net income would not be affected. b) Net income would be understated by $300. c) It cannot be determined. d) Net Income would be overstated by $300.
3 6) A typical accounting adjustment could be: a) recognizing earned revenue b) recognizing depreciation c) recognizing prepaid expenses d) all of the choices 7) Entries are recorded in the journal: a) alphabetically b) chronologically (by date) c) in the order of account numbers used d) randomly 8) The document which records the activities and balances of each specific account is called a: a) journal b) general Ledger c) financial statement d) trial balance 9) The trial balance lists: a) all accounts in the general ledger and their balances b) only income statement accounts c) only balance sheet accounts d) a summary of owner's equity 10) Which of the following accounts will NOT show on the post-closing trial balance? a) Cash b) Rent Expense c) Accounts Payable d) Owner's Equity 11) A post-closing trial balance contains: a) assets and liabilities only b) all zero balances c) revenue and expenses only d) assets, liabilities and owner s equity 12) The Statement of Owner's Equity : a) is used to determine the sources and uses of cash b) is used to calculate ending Owners' equity so that it can be transferred to the income statement c) reports any changes in equity over the reporting period d) reflects increases due to losses and decreases due to profits
4 13) After closing revenues and expenses, but before closing the income summary account a profitable company would show a: a) zero balance in the income summary account b) debit balance in the income summary account c) credit balance in the income summary account d) debit balance in the owner's equity account 14) Cash is generated from day to day activities by: a) Capital exceeding expenses b) Gains on sale of stocks c) Receiving gifts d) Revenue exceeding expenses 15) What is a stakeholder? a) All of the available choices b) Somebody who has invested in a corporation c) Somebody who works in an organization d) A supplier or client of a company 16) Which of the following best defines GAAP? a) A stream of accounting b) A characteristic of accounting c) A professional accounting designation d) A set of standards and acceptable ways of reporting accounting activities 17) Which of the following is the most commonly discussed trade-off of characteristics? a) Reliability vs. Comparability b) Relevance vs. Understandability c) Comparability vs. Understandability d) Relevance vs. Reliability
5 Part II GAAP Principles Match each of the following GAAP principles to the appropriate description in the table below. A. Business entity principle B. Going concern principle C. Monetary unit principle D. Objectivity principle E. Cost principle F. Conservatism principle Corresponding Letter F D B C A E Description The accountant should exercise the option that results in a lower balance of assets, lower net income or a higher balance of debt. Accounting transactions should be recorded on the basis of verifiable evidence. Assumes that a business will continue to operate into the foreseeable future. Financial reports should be expressed in a single currency. Accounting for a business must be kept separate from the personal affairs of its owner or any other business. Accounting for purchases must be recorded at their cost on the date of purchase.
6 Part III Transactions - Revenue & Expense Complete the chart using the transactions below. Under the "Account Type" column, fill the cells with one of the following: Asset, Liability, Revenue or Expense. The first one has been done for you. May 1 Paid cash for travel expenses incurred on this day $2,000 May 2 Paid cash for a one year insurance policy $1,800 May 12 Paid cash for telephone bill that was received and recorded last month $300 May 20 Received cash from a customer for service to be performed next month $800 Received a maintenance invoice for work completed in May which will be paid May 25 next month $400 Date Account Name Account Type Increase or Decrease Amount May 1 Travel Expense Expense Increase $2,000 Cash Asset Decrease $2,000 May 2 Prepaid Expense Asset Increase $1,800 Cash Asset Decrease $1,800 May 12 Accounts Payable Liability Decrease $300 Cash Asset Decrease $300 May 20 Cash Asset Increase $800 Unearned Revenue Liability Increase $800 May 25 Maintenance Expense Expense Increase $400 Accounts Payable Liability Increase $400
7 Part IV Adjusting Entries Below, is Reality Services' unadjusted trial balance at the end of December Adjusting entries have not yet been made. Use the trial balance and the information below to complete the journal entries. DR CR Cash $2,000 Accounts Receivable 3,500 Prepaid Insurance 2,400 Office Supplies 750 Property, Plant & Equipment 8,000 Accumulated Depreciation $0 Accounts Payable 4,400 Unearned Revenue 1,200 Bank Loan 2,800 Capital Account 3,000 Owner's Drawings 1,000 Service Revenue 10,000 Depreciation Expense 0 Insurance Expense 0 Interest Expense 0 Maintenance Expense 800 Supplies Expense 0 Rent Expense 1,400 Salaries Expense 550 Telephone Expense 300 Travel Expense 700 Total $21,400 $21,400 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 A physical count showed that $300 of office supplies are still on hand The property, plant and equipment was purchased at the beginning of the year and is expected to last 5 years and no residual value Of the balance of unearned revenue, $720 has been earned The amount in prepaid insurance is for an annual policy that was paid and commences on September 1, 2012 Interest of $240 was owed on the bank loan, but was unpaid at December 31 st 5 Dec 31 Unrecorded reality services completed but not yet collected from customers at December 31 st amounted to $500.
8 Journal Date Account Title and Explanation DR CR Dec 31 Supplies Expense $450 Office Supplies $450 Adjust office supplies Dec 31 Depreciation Expense $1,600 Accumulated Depreciation $1,600 Depreciate PPE Dec 31 Unearned Revenue $720 Service Revenue $720 Adjust for revenue earned Dec 31 Insurance Expense $800 Prepaid Insurance $800 Adjust for 4 months of insurance Dec 31 Interest Expense $240 Interest Payable $240 To accrue for interest on bank loan Dec 31 Accounts Receivable $500 Service Revenue $500 Accrued for services provided.
9 Part V Business Bookkeeping - Full Accounting Cycle Charles Ly is the owner of Gamma Services. He has hired you to update the transactions for his business. Charles has provided you with the opening balances and a list of transactions for the month of April. The company s Chart of Accounts is also included as shown below. The opening balances for the month of April are as follows: Gamma Services Assets Balance Sheet As at March 31, 2010 Liabilities Cash $22,000 Accounts Payable $10,500 Accounts Receivable 9,000 Unearned Revenue 4,500 Prepaid Insurance 0 Bank Loan 8,000 Property, Plant & Equipment 8,000 Accumulated Depreciation (2,000) Total Liabilities 23,000 Owners' Equity 14,000 Total Assets $37,000 Total Liabilities & Owners' Equity $37,000 Transactions for the month of April: Apr 2 Provided services to a customer, who paid cash $5,000 Adjustments Apr 4 Prepaid insurance for one year $1,200 Apr 7 Paid cash to reduce the balance of accounts payable $200 Apr 10 Provided services to a customer, who will pay later $4,000 Apr 12 Obtained a loan from the bank $10,000 Apr 13 Purchased equipment with cash $9,500 Apr 17 Paid the telephone bill $200 Apr 20 Paid salaries to employees $4,000 Apr 28 The owner withdrew cash for personal use $700 Apr 30 Paid interest on the bank loan $150 Apr 30 Recognized prepaid insurance for this month $100 Apr 30 Recorded deprecation on equipment $400 Apr 30 Recognized unearned that has now become earned $1,800
10 The Chart of Accounts (GL No.) is shown below: ASSETS Account Description Account # Account Description REVENUE Account # Cash 101 Service Revenue 400 Accounts Receivable 105 Interest Revenue 410 Prepaid Insurance 110 EXPENSES Property, Plant & Equipment 120 Advertising Expense 505 Accumulated Depreciation 130 Insurance Expense 510 Maintenance Expense 515 LIABILITIES Professional Fees Expense 520 Accounts Payable 200 Rent Expense 525 Unearned Revenue 205 Salaries Expense 530 Bank Loan 210 Telephone Expense 535 Depreciation Expense 540 OWNER'S EQUITY Interest Expense 545 Capital Account 300 Owner's Drawing 310 Income Summary 315 Required: a) Journalize the transactions. b) Post the transactions to the General Ledger. c) Prepare the adjusted trial balance. d) Prepare the closing journal entries. Assume the company uses the income summary method. e) Post the closing entries to the General Ledger. f) Prepare the post-closing trial balance.
11 Journal Date Account Title & Explanation PR DR CR Apr 2 Cash 101 $5,000 Service Revenue 400 $5,000 Sold product to customer for cash Apr 4 Prepaid Insurance 110 $1,200 Cash 101 $1,200 To record the prepayment of insurance Apr 7 Accounts Payable 200 $200 Cash 101 $200 To record payment to reduce accounts payable Apr 10 Accounts Receivable 105 $4,000 Service Revenue 400 $4,000 Sold product to a customer on account Apr 12 Cash 101 $10,000 Bank Loan 210 $10,000 To record the loan from the bank Apr 13 Property, Plant & Equipment 120 $9,500 Cash 101 $9,500 To record purchase of equipment Apr 17 Telephone Expense 535 $200 Cash 101 $200 To record payment for telephone Apr 20 Salaries Expense 530 $4,000 Cash 101 $4,000 To record payment for salaries Apr 28 Owner's Drawing 310 $700 Cash 101 $700 To record owner's drawings Apr 30 Interest Expense 545 $150 Cash 101 $150 To record payment of loan interest
12 Date Account Title & Explanation DR CR Adjustments: Apr 30 Insurance Expense 510 $100 Prepaid Insurance 110 $100 To adjust prepaid insurance Apr 30 Depreciation Expense 540 $400 Accumulated Depreciation 130 $400 To record depreciation Apr 30 Unearned Revenue 205 $1,800 Service Revenue 400 $1,800 To record earned revenue
13 Account: Cash GL No: 101 Opening Balance $22,000 DR Apr 2 J1 $5,000 $27,000 DR Apr 4 J1 $1,200 $25,800 DR Apr 7 J1 $200 $25,600 DR Apr 12 J1 $10,000 $35,600 DR Apr 13 J1 $9,500 $26,100 DR Apr 17 J1 $200 $25,900 DR Apr 20 J1 $4,000 $21,900 DR Apr 28 J1 $700 $21,200 DR Apr 30 J1 $150 $21,050 DR Account: Accounts Receivable GL No: 105 Opening Balance $9,000 DR Apr 10 J1 $4,000 $13,000 DR Account: Prepaid Insurance GL No: 110 Opening Balance $0 DR Apr 4 J1 $1,200 $1,200 DR Apr 30 To adjust prepaid insurance J1 $100 $1,100 DR Account: Property, Plant & Equipment GL No: 120 Opening Balance $8,000 DR Apr 13 J1 $9,500 $17,500 DR
14 Account: Accumulated Depreciation GL No: 130 Opening Balance $2,000 CR Apr 30 To record depreciation J1 $400 $2,400 CR Account: Accounts Payable GL No: 200 Opening Balance $10,500 CR Apr 7 J1 $200 $10,300 CR Account: Unearned Revenue GL No: 205 Opening Balance $4,500 CR Apr 30 To record earned revenue J1 $1,800 $2,700 CR Account: Bank Loan GL No: 210 Opening Balance $8,000 CR Apr 12 J1 $10,000 $18,000 CR Account: Capital Account GL No: 300 Opening Balance $14,000 CR Apr 30 Clear income summary J1 $5,950 $19,950 CR Apr 30 Clear income summary J1 $700 $19,250 CR
15 Account: Owner's Drawing GL No: 310 Apr 28 J1 $700 $700 DR Apr 30 Clear income summary J1 $700 $0 DR Account: Income Summary GL No: 315 Apr 30 Clear the revenue account J1 $10,800 $10,800 CR Apr 30 Clear the expense accounts J1 $4,850 $5,950 CR Apr 30 Clear income summary J1 $5,950 $0 CR Account: Service Revenue GL No: 400 Apr 2 J1 $5,000 $5,000 CR Apr 10 J1 $4,000 $9,000 CR Apr 30 To record earned revenue J1 $1,800 $10,800 CR Apr 30 Clear the revenue account J1 $10,800 $0 CR Account: Advertising Expense GL No: 505 Account: Insurance Expense GL No: 510 Apr 30 To adjust prepaid insurance J1 $100 $100 DR Apr 30 Clear the expense accounts J1 $100 $0 CR Account: Maintenance Expense GL No: 515
16 Account: Professional Fees Expense GL No: 520 Account: Rent Expense GL No: 525 Account: Salaries Expense GL No: 530 Apr 20 J1 $4,000 $4,000 DR Apr 30 Clear the expense accounts J1 $4,000 $0 DR Account: Telephone Expense GL No: 535 Apr 17 J1 $200 $200 DR Apr 30 Clear the expense accounts J1 $200 $0 DR Account: Depreciation Expense GL No: 540 Apr 30 To record depreciation J1 $400 $400 DR Apr 30 Clear the expense accounts J1 $400 $0 DR Account: Interest Expense GL No: 545 Apr 30 J1 $150 $150 DR Apr 30 Clear the expense accounts J1 $150 $0 DR
17 Gamma Services Adjusted Trial Balance April 30, 2010 Account Titles DR CR DR CR DR CR Cash $21,050 $21,050 Accounts Receivable 13,000 $13,000 Prepaid Insurance 1,100 $1,100 Property, Plant & Equipment 17,500 $17,500 Accumulated Depreciation $2,400 $2,400 Accounts Payable 10,300 $10,300 Unearned Revenue 2,700 $2,700 Bank Loan 18,000 $18,000 Capital Account 14,000 $14,000 Owner's Drawing 700 $700 Service Revenue 10,800 $10,800 Advertising Expense 0 $0 Insurance Expense 100 $100 Maintenance Expense 0 $0 Professional Fees Expense 0 $0 Rent Expense 0 $0 Salaries Expense 4,000 $4,000 Telephone Expense 200 $200 Depreciation Expense 400 $400 Interest Expense 150 $150 Totals $58,200 $58,200 $4,850 $10,800 $52,650 $48,100 Net Profit (Loss) $5,950 $5,950 Total $58,200 $58,200 $10,800 $10,800 $52,650 $54,050
18 Gamma Services Income Statement For the Month Ending April 30, 2010 Revenue $10,800 Less Expenses Advertising Expense $0 Insurance Expense 100 Salaries Expense 4,000 Telephone Expense 200 Depreciation Expense 400 Interest Expense 150 Total Expenses 4,850 Net Income $5,950 Gamma Services Statement of Owner's Equity For the Month Ending April 30, 2010 Opening Capital Account $14,000 Add: Net Income $5,950 Less: Owner's Drawings (700) Ending Capital Account $19,250
19 Gamma Services Balance Sheet April 30, 2010 Assets Cash $21,050 Accounts Receivable 13,000 Prepaid Insurance 1,100 Property, Plant & Equipment $17,500 Accumulated Depreciation (2,400) 15,100 Total Assets $50,250 Liabilities Accounts Payable $10,300 Unearned Revenue 2,700 Bank Loan 18,000 Total Liabilities $31,000 Owner's Equity Capital Account 19,250 Liabilities + Owner's Equity $50,250
20 Closing Entries: Date Account Title & Explanation DR CR Apr 30 Service Revenue $10,800 Income Summary $10,800 Clear the revenue account Apr 30 Income Summary $4,850 Insurance Expense $100 Salaries Expense $4,000 Telephone Expense $200 Depreciation Expense $400 Interest Expense $150 Clear the expense accounts Apr 30 Income Summary $5,950 Capital Account $5,950 Clear income summary Apr 30 Capital Account $700 Owner's Drawing $700 To close owner's drawings
21 Gamma Services Post-Closing Trial Balance April 30, 2010 Account DR CR Cash $21,050 Accounts Receivable 13,000 Prepaid Insurance 1,100 Property, Plant & Equipment 17,500 Accumulated Depreciation $2,400 Accounts Payable 10,300 Unearned Revenue 2,700 Bank Loan 18,000 Capital Account 19,250 Total $52,650 $52,650
22 Part VI Worksheet Vius Company unadjusted trial balance is shown below, at the end of December Adjusting entries have not yet been made. DR CR Cash $6,000 Accounts Receivable 3,000 Prepaid Insurance 2,400 Office Supplies 1,000 Property, Plant & Equipment 10,000 Accumulated Depreciation $0 Accounts Payable 5,000 Unearned Revenue 1,400 Bank Loan 3,500 Capital Account 9,250 Owner's Drawings 800 Service Revenue 9,000 Depreciation Expense 0 Insurance Expense 0 Interest Expense 0 Maintenance Expense 700 Supplies Expense 0 Rent Expense 2,100 Salaries Expense 900 Telephone Expense 500 Travel Expense 750 Total $28,150 $28,150 Dec 31 Dec 31 Dec 31 Dec 31 A physical count showed that $400 of supplies are still on hand The property, plant and equipment was purchased at the beginning of the year and is expected to last 4 years and no residual value Of the balance of unearned revenue, $840 has been earned The amount in prepaid insurance is for an annual policy that was paid on October 1, Required: Complete the worksheet by using the trial balance and the information given.
23 Vius Company Worksheet December 31, 2011 Unadjusted Trial Balance Adjustments Adjusted Trial Balance Account Titles DR CR DR CR DR CR Cash $6,000 $6,000 Accounts Receivable 3,000 3,000 Prepaid Insurance 2, ,800 Office Supplies 1, Property, Plant & Equipment 10,000 10,000 Accumulated Depreciation $0 2,500 $2,500 Accounts Payable 5,000 5,000 Unearned Revenue 1, Bank Loan 3,500 3,500 Capital Account 9,250 9,250 Owner's Drawings Service Revenue 9, ,840 Depreciation Expense 0 2,500 2,500 Insurance Expense Interest Expense 0 0 Maintenance Expense Supplies Expense Rent Expense 2,100 2,100 Salaries Expense Telephone Expense Travel Expense Total $28,150 $28,150 $4,540 $4,540 $30,650 $30,650
24 Part VII Closing Entries Below is the year-end trial balance for Serava Marketing : Serava Marketing Trial Balance For the period ending December 31, 2012 Account # Account Title DR CR 101 Cash 20, Accounts Receivable 10, Prepaid Insurance 6, Accounts Payable 3, Unearned Revenue 3, Capital Account 30, Owner's Drawing 1, Service Revenue 6, Insurance Expense 2, Rent Expense 1, Depreciation Expense 1,100 Totals 42,500 42,500 Prepare the journal entries to close the appropriate accounts using the income summary. Date Description DR CR Dec 31 Service Revenue $6,000 Income Summary $6,000 To close the revenue accounts Dec 31 Income Summary $4,700 Insurance Expense $2,400 Rent Expense $1,200 Depreciation Expense $1,100 To close the expense accounts Dec 31 Income Summary $1,300 Capital Account $1,300 To close the income summary account Dec 31 Capital Account $1,800 Owner's Drawing $1,800 To close the owner's drawing account
25 Part VIII Financial Statements Shown below is Voxa Marketing financial accounting information for the year ended July 31, Assume no additional owner's inv occurred during the year. Voxa Marketing List of Accounts July 31, 2012 Account Titles Balance Accounts Payable $5,000 Accounts Receivable 4,000 Bank Loan 3,500 Capital Account 2,370 Cash 2,800 Depreciation Expense 400 Insurance Expense 300 Maintenance Expense 200 Owner's Drawings 800 Prepaid Insurance 2,400 Property, Plant & Equipment 6,000 Rent Expense 1,000 Service Revenue 7,600 Telephone Expense 500 Travel Expense 850 Unearned Revenue 780 Required: Using this information, prepare the Income Statement, Statement of Owners' Equity and then the Balance Sheet as at July 31, 2012.
26 Voxa Marketing Income Statement For the Year Ended July 31, 2012 Revenue Service Revenue $7,600 Expenses Insurance Expense 300 Maintenance Expense 200 Rent Expense 1,000 Telephone Expense 500 Travel Expense 850 Depreciation Expense 400 Total Expenses 3,250 Net Income (Loss) $4,350 Voxa Marketing Statement of Owner's Equity For the Year Ended July 31, 2012 Capital Account at August 1, 2011 $2,370 Add Additional Investments $0 Add Net Income (Loss) 4,350 Subtotal 6,720 Subtract Owner's Drawings 800 Capital Account at July 31, 2012 $5,920
27 Voxa Marketing Balance Sheet As at July 31, 2012 Assets Cash $2,800 Accounts Receivable 4,000 Prepaid Insurance 2,400 Property, Plant & Equipment $6,400 Less: Accumulated Depreciation (400) 6,000 Total Assets $15,200 Liabilities Accounts Payable $5,000 Unearned Revenue 780 Bank Loan 3,500 Total Liabilities $9,280 Owner's Equity Capital Account 5,920 Total Liabilities & Owner's Equity $15,200
28
Accounting Cycle. Matching Principle
CHAPTER 3 Accounting Cycle Analyze and record the transactions Post the transactions and prepare trial balance Adjust the accounts and prepare trial balance Prepare the financial statements Close the accounts
More informationCOMPLETION OF THE ACCOUNTING CYCLE - Closing Entries -
COMPLETION OF THE ACCOUNTING CYCLE - Closing Entries - Worksheet Overview Trial Balance Adjustments Adjusted Trial Balance Income Statement Balance Sheet Account Titles Debit Credit Debit Credit Debit
More information1. If the assets owned by a business total $100,000 and liabilities total $70,000, stockholders' equity totals $30,000.
Rallis Page 1 Name: _ Date: 1. If the assets owned by a business total $100,000 and liabilities total $70,000, stockholders' equity totals $30,000. A) True B) False 2. If total liabilities decreased by
More informationAdjusting the Accounts
HOSP 1210 (Financial Acct) Learning Centre Adjusting the Accounts Anytime we prepare financial statements or reach the end of an accounting period, there are account adjustments that need to be made to
More informationAccumulated Depreciation Equipment
Chapter 4 Completing the Accounting Cycle > DO IT! Worksheet Balance sheet: Extend assets to debit column. Extend liabilities to credit column. Extend contra assets to credit column. Extend drawings account
More informationHow To Calculate A Trial Balance For A Company
THE BASIC MODEL The accounting information system is designed to collect and organize data into information that is useful for stakeholders. The Accounting Equation The basic accounting equation is what
More informationTime Period Assumption
ILLUSTRATION 3-1 GUIDELINES TO REPORT REVENUE AND EXPENSES Time Period Assumption Economic life of business can be divided into artificial time periods Revenue Recognition Principle Revenue recognized
More informationb. Do not recognize revenue until steel is shipped. c. Do not recognize revenue until next year after the games are played.
CHAPTER FOUR SE4-2 Revenue recognition a. Recognize revenue from car sales for 12,000. Notes receivable $12,000 Sales revenue $12,000 b. Do not recognize revenue until steel is shipped. c. Do not recognize
More informationChapter 5 Accrual Adjustments and Financial Statement Preparation. Revenue recognition Matching expenses to revenues Expenses related to periods
Chapter 5 Accrual Adjustments and Financial Statement Preparation Revenue recognition Matching expenses to revenues Expenses related to periods 1 The Measurement of Income major function of accounting
More informationChapter 4. Completing the accounting cycle
1 Chapter 4 Completing the accounting cycle 2 Learning objectives 1. Prepare an accounting worksheet and describe its purpose 2. Prepare a classified balance sheet and explain the major headings 3. Explain
More informationThe worksheet for Hancock Company shows the following in the financial statement
Chapter 4 Do it! Susan Elbe is preparing a worksheet. Explain to Susan how she should extend the following adjusted trial balance accounts to the financial statement columns of the worksheet. Cash Accumulated
More informationCompleting the Accounting Cycle
C H A P T E R 4 Completing the Accounting Cycle Financial Accounting 14e Warren Reeve Duchac human/istock/360/getty Images Flow of Accounting Information (slide 1 of 5) End-of-Period Spreadsheet (Work
More informationCHAPTER 3 ADJUSTING THE ACCOUNTS
CHAPTER 3 ADJUSTING THE ACCOUNTS TIME PERIOD ASSUMPTION The time period (or periodicity) assumption assumes that the economic life of a business can be divided into artificial time periods generally a
More informationAccrual accounting ACCRUAL VERSUS CASH BASIS OF ACCOUNTING. ACCRUAL VERSUS CASH BASIS OF ACCOUNTING continued. Chapter 3
Chapter 3 Accrual accounting concepts PowerPoint presentation by Anne Abraham University of Wollongong 2009 John Wiley & Sons Australia, Ltd ACCRUAL VERSUS CASH BASIS OF ACCOUNTING Accrual-based accounting
More informationTRANSACTIONS ANALYSIS EXAMPLE. Maxwell Partners Medical Diagnostic Services report the following information for 2011, their first year of operations:
TRANSACTIONS ANALYSIS EXAMPLE Maxwell Partners Medical Diagnostic Services report the following information for 2011, their first year of operations: 1. Billings to clients for services provided: $350,000
More informationClosing Entries and the Postclosing Trial Balance
6-1 McGraw-Hill 2009 The McGraw-Hill Companies, Inc. All rights reserved. Chapter Closing Entries and the Postclosing Trial Balance 6 Section 1: Closing Entries Section Objectives 1. Journalize and post
More informationVol. 1, Chapter 3 - Accounting Adjustments
Vol. 1, Chapter 3 - Accounting Adjustments Problem 1 1. ($20,000 2,000) 48 = $375 per month 2. Jan. 31 Depreciation Expense $375 Accumulated Depreciation Van $375 To record depreciation expense for January
More informationSOLUTIONS. Learning Goal 16
Learning Goal 16: Prepare Closing Entries S1 Learning Goal 16 Multiple Choice 1. d 2. a 3. b 4. d Because drawing is closed directly into the capital account, not into income summary. 5. c 6. b This a
More information> DO IT! Chapter 3 Adjusting the Accounts. Timing Concepts. Adjusting Entries for Deferrals D-12. Solution
Chapter 3 Adjusting the Accounts Timing Concepts Review the glossary terms. Study carefully the revenue recognition principle, the expense recognition principle, and the time period assumption. Several
More informationAccounting 300A-10A The Operating Cycle: Worksheet/Closing Entries Page 1
Accounting 3A-1A The Operating Cycle: Worksheet/Closing Entries Page 1 THE WORKSHEET and CLOSING ENTRIES I. Review of Key Concepts and Terms: A. The purpose of the worksheet 1. To show that the accounts
More informationEXERCISES. Does not normally require adjustment. Normally requires adjustment (AE).
EXERCISES Ex. 3 1 1. Prepaid expense 2. Accrued revenue 3. Unearned revenue 4. Accrued expense 5. Unearned revenue 6. Prepaid expense 7. Accrued expense 8. Accrued expense Ex. 3 2 Account Accounts Receivable...
More informationAccounting Self Study Guide for Staff of Micro Finance Institutions
Accounting Self Study Guide for Staff of Micro Finance Institutions LESSON 5 Summarizing Changes in Financial Position OBJECTIVES The purpose of this lesson is to show how to summarize the transactions
More informationCHAPTER 4. Adjusting the accounts and preparing financial statements CONTENTS
CHAPTER 4 Adjusting the accounts and preparing financial statements CONTENTS Demonstration problem 4.1 Adjusting entries and corrections 4.2 Adjusting centries and effect on financial statements 4.3 Adjusting
More informationModule 3: Adjusting the accounts, preparing the statements, and completing the accounting cycle
Page 1 of 27 Module 3: Adjusting the accounts, preparing the statements, and completing the accounting cycle Overview In Module 2 you studied the fundamental steps in recording accounting information by
More informationSMART TOUCH LEARNING Balance Sheet May 31, 2013 $ 4,800. $ 48,700 Accounts receivable 2,600. 900 Inventory 30,500. 100 Supplies.
3 The Adjusting Process Are these balances correctly showing everything the company OWNS? SMART TOUCH LEARNING ance Sheet May 31, 2013 Are these balances correctly showing everything the company OWES?
More informationBasic Accounting Principles
Basic Accounting Principles Basic Accounting Model The basic accounting model represents the relationship between assets (what the company owns), liabilities (what the company owes), and owner s equity
More informationPeriodicity Assumption... Time Period Assumption... Chapter 4 Accrual Accounting Concepts
Financial Accounting: Tools for Business Decision Making, 4th Ed. CHAPTER 4 Kimmel, Weygandt, Kieso Chapter 4 Accrual Accounting Concepts KEY THINGS WE LL DO: Refresh and expand Ch.3 concepts. Differentiate
More informationThe General Journal and the General Ledger
4-1 McGraw-Hill 2009 The McGraw-Hill Companies, Inc. All rights reserved. Chapter 4 The General Journal and the General Ledger Section 1: The General Journal Section Objectives 1. Record transactions in
More informationCHAPTER 3: PREPARING FINANCIAL STATEMENTS
CHAPTER 3: PREPARING FINANCIAL STATEMENTS I. TIMING AND REPORTING A. The Accounting Period Time period assumption an organization s activities can be divided into specific time periods. Examples: a month,
More informationPART 1. BASIC CONCEPTS AND ACCOUNTING MODEL
CHAPTER 1 PART 1. BASIC CONCEPTS AND ACCOUNTING MODEL OBJECTIVES The objectives of this part are: To introduce a definition of accounting, the need for accounting information, and the various accounting
More informationChapter 13 Financial Statements and Closing Procedures
Chapter 13 - Financial Statements and Closing Procedures Chapter 13 Financial Statements and Closing Procedures TEACHING OBJECTIVES 13-1) Prepare a classified income statement from the worksheet. 13-2)
More informationCHAPTER 2 REVIEW OF THE ACCOUNTING PROCESS. Lecture Outline
CHAPTER 2 REVIEW OF THE ACCOUNTING PROCESS Overview Chapter 1 explained that the primary means of conveying financial information to investors, creditors, and other external users is through financial
More informationSupplement to CHAPTER 3 CLOSING ENTRIES AND THE WORK SHEET
Supplement to CHAPTER 3 CLOSING ENTRIES AND THE WORK SHEET Answers to Review Questions 1. No, the work sheet cannot be used as a substitute for the financial statements. It is a tool used in preparing
More informationChapter 2. Analyzing transactions
1 Chapter 2 Analyzing transactions 2 Learning objectives 1. Explain the steps in the accounting cycle and each step s supporting documentation 2. Explain the purpose of source documents 3. Describe an
More informationAccg100 Accounting 1A. Lecture Notes
Accg100 Accounting 1A Lecture Notes Semester 2, 2012 1 Table of Contents Lecture Notes Page Week 1: Introduction to Accounting, Ethics, 3 Business Entities, Financial Statements Week 2: Accounting for
More informationAssignment 6: Adjusting Journal Entries and
Name: Due Date: December 12, 2011 Score: out of a possible 47 Course value: 7.5% Assignment 6: Adjusting Journal Entries and Worksheets A series of transactions are presented and their journal entries
More informationThe Matching Concept and the Adjusting Process
The Matching Concept and the Adjusting Process o b j e c t i v e s After studying this chapter, you should be able to: 4 Explain how the matching concept relates to the accrual basis of accounting. Explain
More informationAssessment Schedule 2013 Accounting: Prepare financial information for an entity that operates accounting subsystems (91176)
NCEA Level 2 Accounting (91176) 2013 Page 1 of 7 Assessment Schedule 2013 Accounting: Prepare financial information for an entity that operates accounting subsystems (91176) Evidence Part A Question One
More informationHow To Account For Revenue Under Accrual Accounting
BAT 4M: Chapter 3 ANSWERS TO QUESTIONS 01. (a) Under the time period assumption, an accountant is required to determine the relevance of each business transaction to specific accounting periods, and its
More information(a) (i) Marking Scheme: 1 mark for definition and 1 mark for example.
T A S M A N I A N Accounting C E R T I F I C A T E Subject Code ACC5C O F E D U C A T I O N Question 1 T A S M A N I A N Q U A L I F I C A T I O N S A U T H O R I T Y (a) (i) Marking Scheme: 1 mark for
More informationMIDTERM EXAMINATION. Afaaq_tariq@yahoo.com. Fall 2009
MIDTERM EXAMINATION Afaaq_tariq@yahoo.com Fall 2009 FIN621- Financial Statement Analysis Asslam O Alikum FIN621- Financial Statement Analysis (Session 3) solved by Afaaq n Shani Bhai with reference n numerical
More informationACS-1803 Introduction to Information Systems. Functional Area Systems. Lecture 4
ACS-1803 Introduction to Information Systems Instructor: David Tenjo Functional Area Systems Lecture 4 1 Overview Overview of Functional Areas in the organization Functional Area: Accounting Accounting
More informationThe Accounting Process
GAAP LITERATURE The Accounting Process Chapter 3 TRADITIONAL: Original pronouncements, issued by the FASB. SEPT. 2009 CHANGE: Codification issued by the FASB. DIFFERENCE: Codification is listed by topic
More informationPreparing Financial Statements
Carroll_CH03_023-040.qxd 8/10/06 4:37 PM Page 23 CHAPTER 3 Preparing Financial Statements OBJECTIVES F After reading this chapter, the student should be able to: 1. Describe the general process by which
More informationANSWERS TO QUESTIONS FOR GROUP LEARNING
Accounting for a 5 Merchandising Business ANSWERS TO QUESTIONS FOR GROUP LEARNING Q5-1 A merchandising business has a major revenue reduction called cost of goods sold. The computation of cost of goods
More informationShe Wears A Bullet-Proof Vest:
She Wears A Bullet-Proof Vest: Detailed Solving Steps for the 2014 Regional Accounting Exam s Work Sheet Problems Prepared by: LaVerne Funderburk, CPA UIL Accounting State Contest Director 2014 UIL Capital
More informationCHAPTER 4 COMPLETING THE ACCOUNTING CYCLE SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM S TAXONOMY. True-False Statements
CHAPTER 4 COMPLETING THE ACCOUNTING CYCLE SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM S TAXONOMY Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT True-False Statements 1. 1 K 9. 2 K 17. 4
More informationAdvanced Accounting. Chapter 4: Financial Reporting for a Departmentalized Business
Advanced Accounting Chapter 4: Financial Reporting for a Departmentalized Business Financial statements are used to summarize financial info and then are used to evaluate the financial position and progress
More informationChapter 4 Adjustments, Financial Statements, and the Quality of Earnings
Chapter 4 Adjustments, Financial Statements, and the Quality of Earnings ANSWERS TO QUESTIONS 1. Adjusting entries are made at the end of the accounting period to record all revenues and expenses that
More informationThe Double-Entry System EFFECTS OF TRANSACTIONS ON THE BALANCE SHEET. Initial Paid-in Capital. An Example Entity. Transaction 2.
The Double-Entry System EFFECTS OF TRANSACTIONS ON THE BALANCE SHEET 2001 Richard S. Barr Transaction: Any event that affects the entity's financial position and requires recording Every accounting transaction
More informationThe Nature of Accounting Systems
Basic Accounting & Budgeting February 4, 2009 The Nature of Accounting Systems Accounting is the process of recording, classifying, summarizing, reporting and interpreting information about the economic
More informationFINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING FORMATION 2 EXAMINATION - AUGUST 2012 NOTES: You are required to answer Question 1. You are also required to answer any three out of Questions 2 to 5. (If you provide answers to all
More informationPrinciples of Accounting I ACCT-1104
Principles of Accounting I ACCT-1104 Adjusting Entries Review Click Here to Proceed How to Use this Reivew For each transaction you are given, write your answer on a piece of paper. Once you have answered
More informationUNIVERSITY OF WATERLOO School of Accounting and Finance
UNIVERSITY OF WATERLOO School of Accounting and Finance AFM 101 Professor Duane Kennedy Mid-Term Examination Fall 2008 Date and Time: October 16, 2008, 7:15 8:45pm Pages: 16, including cover Name: Student
More informationChapter 4. Completing the accounting cycle. Appendix 4A: Reversing entries
1 Chapter 4 Completing the accounting cycle Appendix 4A: Reversing entries 2 Learning objective 1. Prepare reversing entries and describe their purpose 3 Reversing entries Reversing entries are optional
More informationMarist College ACCT 203 Financial Accounting Quiz Prep Chapter 3
Marist College ACCT 203 Financial Accounting Quiz Prep Chapter 3 The Accounting Cycle: Capturing Economic Events Peter Rivera August 2011 Disclaimer This Quiz Prep is provided as an outline of the key
More informationStudent Solutions Manual to Accompany. Introduction to Financial Accounting. David Annand. Based on International Financial Reporting Standards
Student Solutions Manual to Accompany Introduction to Financial Accounting Based on International Financial Reporting Standards David Annand Copyright 2014 David Annand Published by David Annand 4910C
More informationThe Work Sheet and the Closing Process
C H A P T E R 4 The Work Sheet and the Closing Process A systematic approach is essential for efficient and accurate processing of large amounts of information. Whether work sheets are on paper or computerized,
More informationThe Adjusting Process
Chapter 03.qxd 5/21/08 7:07 PM Page 99 C H A P T E R 3 AP Photo/Jeff Kravitz Fo r Sa le The Adjusting Process M A R V E L D E N T E R T A I N M E N T, N ot o you subscribe to any magazines? Most of us
More informationModule 3: Adjusting the accounts, preparing the statements, and completing the accounting cycle
Course Schedule Course Modules Review and Practice Exam Preparation Resources Module 3: Adjusting the accounts, preparing the statements, and completing the accounting cycle Overview In Module 2 you studied
More informationAccounting Principles Dr. Mishari Alfraih. Adjusting the Accounts
Accrual- vs. Cash-Basis Accounting Accrual-Basis Accounting Adjusting the Accounts Transactions recorded in the periods in which the events occur Revenues are recognized when earned, rather than when cash
More informationAccounting Notes. Cash - includes money and any medium of exchange that a bank accepts at face value
Asset Accounts: Cash - includes money and any medium of exchange that a bank accepts at face value Accounts Receivable - a record of an oral or implied promise of future cash receipts in exchange for goods
More informationChapter 6 Statement of Cash Flows
Chapter 6 Statement of Cash Flows The Statement of Cash Flows describes the cash inflows and outflows for the firm based upon three categories of activities. Operating Activities: Generally include transactions
More informationAccounting II Second Semester Final
Name: Class: Date: Accounting II Second Semester Final Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. Profit is the difference between:
More informationTHE ACCOUNTING INFORMATION SYSTEM
CHAPTER 3 THE ACCOUNTING INFORMATION SYSTEM OVERVIEW Accounting information must be accumulated and summarized before it can be communicated and analysed. In this chapter, we will discuss the steps involved
More informationCHAPTER 2 ACCOUNTING FOR TRANSACTIONS
CHAPTER 2 ACCOUNTING FOR TRANSACTIONS Key Terms and Concepts to Know Double entry accounting: Debits and Credits Total debits must always equal total credits Accounting Books: Accounts General Journal
More informationClosing the Books Section 7 Accounting 11
Closing the Books At the end of a fiscal year once all the transactions for the entity have been recorded, the revenue and expense accounts must be closed out to a zero balance. These accounts have been
More informationAuthored for ENMU Tutoring Services. By Jessica Huff
By Jessica Huff The standard accounting equation is Assets=Liabilities + Stockholders Equity. Depending on which item someone is looking at will determine what the normal balance is. The normal balance
More informationCHAPTER 3. BE3-2 Advertising. Dec. 31 Advertising Supplies Expense 7200 Advertising Supplies 7200 to adjust. BE3-3 Bere Co.
CHAPTER 3 BE3-2 Advertising Advertising Supplies Supplies Expense 8700 7200 7200 1500 7200 Dec. Advertising Supplies Expense 7200 Advertising Supplies 7200 BE3-3 Bere Co. Prepaid Insurance Insurance Expense
More informationGold Run Snowmobile. Adjusting Entries and Closing Entries For The Quarter Ended December 31. Final Project Evaluation. 5 th Edition.
Gold Run Snowmobile 5 th Edition Adjusting Entries and Closing Entries For The Quarter Ended December 31 and the Final Project Evaluation Page 1 ADJUSTING ENTRIES FOR THE QUARTER Using a copy of the December
More informationAccruals and prepayments
5 Accruals and prepayments this chapter covers... In the last chapter we have looked at the preparation of financial statements or final accounts using the extended trial balance, or spreadsheet, approach.
More informationChapter 4: Accounting Records
Chapter 4: Accounting Records Structure and terminology of Double Entry Bookkeeping The T account records the effect of transactions under one accounting aspect two opposite effects possible, e.g. inflows
More informationUNIVERSITY OF WATERLOO School of Accounting and Finance
UNIVERSITY OF WATERLOO School of Accounting and Finance AFM 101 Professor Shari Mann Professor Donna Psutka Professor Mindy Wolfe Mid-Term Examination Fall 2010 Date and Time: October 21, 2010, 6:30 8:00pm
More informationWilliam B. Pollard, Appalachian State University, Boone, NC 28608, pollardwb@appstate.edu INTRODUCTION
TEACHING PRINCIPLES OF ACCOUNTING: HELPING STUDENTS IDENTIFY TEN DIFFERENCES WHEN COMPARING A TRIAL BALANCE, AN ADJUSTED TRIAL BALANCE AND A BALANCE SHEET William B. Pollard, Appalachian State University,
More informationGlossary of Accounting Terms Peter Baskerville
Glossary of Accounting Terms Peter Baskerville Account for or 'bring to account': An accounting phrase used to describe the recording of a financial transaction that is required under the generally accepted
More informationMidterm Fall 2012 Solution
Midterm Fall 2012 Solution Instructions: 1) Answers for the multiple-choice questions must be recorded on the UW answer card. All other questions must be answered in the space provided on the examination
More informationIn the event of a tie, the score on the last ten questions will be used as a tie-breaker.
NEW YORK STATE ASSOCIATION FUTURE BUSINESS LEADERS OF AMERICA SPRING DISTRICT MEETING ACCOUNTING II 2010 TEST DIRECTIONS 1. Complete the information requested on the answer sheet. PRINT your name on the
More informationHow To Account For A Company
Institution: Great Bay Community College Course: Introduction to Accounting and Financial Reporting I, ACCT 113 Required Text: Fundamentals of Accounting Principles, Latest edition; Larson Packet Contents:
More informationLearning Objectives: Quick answer key: Question # Multiple Choice True/False. 14.1 Describe the important of accounting and financial information.
0 Learning Objectives: 14.1 Describe the important of accounting and financial information. 14.2 Differentiate between managerial and financial accounting. 14.3 Identify the six steps of the accounting
More informationAccounting 101 you don t have to be an accountant to run MYOB Your Daily Lives Cash vs. Accrual Accounting
MYOB US, Inc. April 2002 Accounting 101 Like all small business owners, you went into business with a dream: to sell your unique product or services and make a living for you, your family, and your employees.
More informationCENTRE FOR CONTINUING EDUCATION BBA (AVIATION OPERATION)
CENTRE FOR CONTINUING EDUCATION BBA (AVIATION OPERATION) BATCH: SEMESTER: NAME: ROLL NO: ASSIGNMENT 1 & 2 FOR BUSINESS ACCOUNTING BBCF 131 UNIVERSITY OF PETROLEUM & ENERGY STUDIES Assignment-1 Note: All
More informationSECTION 8.1 REVIEW QUESTIONS (page 275)
CHAPTER 8 Completing the Accounting Cycle SECTION 8.1 REVIEW QUESTIONS (page 275) 1. Year-end financial statements are superior to interim financial statements because all accounts are brought up to date,
More informationPART A: TRUE/FALSE (1 point each):
CHABOT COLLEGE General Accounting (BUS-7) Dmitriy Kalyagin PART A: TRUE/FALSE (1 point each): EXAM #4 (Chapters 10, 12, 13) 1. Employees who are exempt from the FLSA are entitled for overtime pay for hours
More informationChapter 3: Double-Entry Bookkeeping
Chapter 3: Double-Entry Bookkeeping Double-entry bookkeeping underpins accounting A way of systematically recording the financial transactions of a company so that each transaction is recorded twice. Basic
More informationThe Accounting Equation & Transaction Analysis
HOSP 1860 (Financial Acct) Learning Centre The Accounting Equation & Transaction Analysis A business must always have a balance between what it owns and what it owes. This is shown by the basic accounting
More informationCHAPTER 6. Accounting for retailing CONTENTS
CHAPTER 6 Accounting for retailing CONTENTS 6.1 Journal entries periodic inventory system 6.2 Journal entries involving discounts, closing entries and statements of financial performance both perpetual
More informationAssessment Schedule 2010 Accounting: Prepare financial statements and related accounting entries for sole proprietors (90224)
NCEA Level 2 Accounting (90224) 2010 page 1 of 7 Assessment Schedule 2010 Accounting: Prepare financial statements and related accounting entries for sole proprietors (90224) Evidence Statement ONE Part
More informationAccrual Accounting and the Financial Statements
Accrual Accounting and the Financial Statements 3 LEARNING OBJECTIVES SPOTLIGHT Le Château has been selling fashion apparel, footwear, and accessories in Canada for over 50 years. What started as a single,
More informationARCHDICOESE OF SEATTLE
ARCHDICOESE OF SEATTLE SECTION C PARISH ACCOUNTING CONCEPTS INDEX I. ACCOUNTING DEFINITIONS 1C - 3C II. RECORD KEEPING JOURNALS 4C - 5C III. GENERAL LEDGER 5C IV. DOUBLE ENTRY ACCOUNTING V. RECEIVABLES,
More informationAccrual vs Deferral Accrual vs Cash Basis
1 - Accrual vs Deferral Accrual vs Cash Basis - understanding debits and credits a transaction either increases or decreases the balance of accounts. increases and decreases in accounts are based on the
More informationSOLUTIONS. Learning Goal 15
Learning Goal 15: Prepare a Classified S1 Learning Goal 15 Multiple Choice 1. b 2. c 3. a 4. b 5. d 6. a 7. c Their importance in paying current liabilities is the main reason current assets are shown
More informationAccounting Basics, Part 1
Accounting Basics, Part 1 Accrual, Double-Entry Accounting, Debits & Credits, Chart of Accounts, Journals and, Ledger Part 1 What s Here Introduction Business Types Business Organization Professional Advice
More informationFor More Course Tutorials Visit www.uoptutorial.com
ACC 205 WEEK 2 EXERCISE ASSIGNMENT REVENUE AND EXPENSES(NEW) Click Here to Buy the Tutorial http://www.uoptutorial.com/index.php?route=product/p roduct&path=641&product_id=9760 For More Course Tutorials
More informationCOMPONENTS OF THE STATEMENT OF CASH FLOWS
ILLUSTRATION 24-1 OPERATING, INVESTING, AND FINANCING ACTIVITIES COMPONENTS OF THE STATEMENT OF CASH FLOWS CASH FLOWS FROM OPERATING ACTIVITIES + Sales and Service Revenue Received Cost of Sales Paid Selling
More informationIn the event of a tie, the score on the last ten questions will be used as a tie-breaker.
NEW YORK STATE ASSOCIATION FUTURE BUSINESS LEADERS OF AMERICA SPRING DISTRICT MEETING ACCOUNTING I 2010 TEST DIRECTIONS 1. Complete the information requested on the answer sheet. PRINT your name on the
More informationAccounting Skills Assessment Practice Exam Page 1 of 10
NAU ACCOUNTING SKILLS ASSESSMENT PRACTICE EXAM & KEY 1. A company received cash and issued common stock. What was the effect on the accounting equation? Assets Liabilities Stockholders Equity A. + NE +
More information'i*,; V' Your answer is correct! Match the Item on the left wlth the definition on the rtght.
Match the Item on the left wlth the definition on the rtght. V' Your answer is correct! ~ Income statement """' ~ Reports a business's revenues and expenses for a period of time. ~ Balance sheet 1rt1 ~
More information