...Divdends Expenses Assets Debit Liabilities Owners' equity Revenues Credit Debit Credit General Form Date Account name Debit Account name Credit Initial Investment in a Company Date Cash Assets Debit Common Stock Liabilities + + Cash Owners' Equity + Common Stock Credit Purchase Building with a Loan Date Buildings Assets Debit Notes Payable = +Buildings Liabilities + Owners' Equity + Note Payable Credit Purchase Equipment for Cash Date Equipment Assets Debit Cash Credit Pay one year's Rent Date Prepaid Rent = Debit Provide Business Services on Credit Date Accounts Recievable Debit Service Revenue Credit Liabilities + Owners' Equity = Liabilities + Owners' Equity = Liabilities + Owners' Equity +Buildings -Cash Assets Cash = +Prepaid Rent -Cash Assets +Accounts Recievable Credit +Service Revenue (Revenue increases NI increases RE) Provide Business Services for Cash Date Cash Assets Debit Service Revenue = Liabilities + +Cash +Service Revenue (Revenue increases NI increases RE) Credit Pay for Advertising with Cash Date Advertising Expense Cash Assets Debit = Liabilities + -Cash Purchase Supplies on Account Assets Debit Accounts Payable = +Supplies Liabilities + Purchase Supplies Assets Debit Cash Credit Sell products...
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...CHAPTER 4 Completing the Accounting Cycle ASSIGNMENT CLASSIFICATION TABLE Study Objectives *1. Prepare a worksheet. *2. Explain the process of closing the books. *3. Describe the content and purpose of a post-closing trial balance. *4. State the required steps in the accounting cycle. *5. Explain the approaches to preparing correcting entries. *6. Identify the sections of a classified balance sheet. *7. Prepare reversing entries. Questions 1, 2, 3, 4, 5 6, 7, 11, 12 8, 9 Brief Exercises 1, 2, 3 4, 5, 6 7 Exercises 1, 2, 3, 5, 6, 17 4, 7, 8, 11, 19 4, 7, 8 A Problems 1A, 2A, 3A, 4A, 5A 1A, 2A, 3A, 4A, 5A 1A, 2A, 3A, 4A, 5A 5A 6A B Problems 1B, 2B, 3B, 4B, 5B 1B, 2B, 3B, 4B, 5B 1B, 2B, 3B, 4B, 5B 5B 10, 11, 12 13 8 9 10, 19 12, 13 14, 15, 16, 17, 18 10, 19, 20 10, 11 12 3, 9, 14 15, 16, 17 18, 19 1A, 2A, 3A, 4A, 5A 1B, 2B, 3B, 4B, 5B *Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix *to the chapter. 4-1 ASSIGNMENT CHARACTERISTICS TABLE Problem Number 1A 2A 3A 4A 5A 6A 1B 2B 3B 4B 5B Description Prepare worksheet, financial statements, and adjusting and closing entries. Complete worksheet; prepare financial statements, closing entries, and post-closing trial balance. Prepare financial statements, closing entries, and postclosing trial balance. Complete worksheet; prepare classified balance sheet, entries, and post-closing trial balance. Complete all steps in accounting cycle. Analyze errors...
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...or M MACRS n/30 n/eom P/E Ratio POS ROI SEC TQC American Accounting Association Activity-based costing American Institute of Certified Public Accountants Certified Internal Auditor Computer-integrated manufacturing Certified Management Accountant Certified Public Accountant Credit Debit Electronic funds transfer Earnings per share Financial Accounting Foundation Financial Accounting Standards Board Financial Executives International Federal Insurance Contributions Act tax First-in, first-out Free on board Generally accepted accounting principles Governmental Accounting Standards Board Gross National Product Institute of Management Accountants Internal Revenue Code Internal Revenue Service Just-in-time Last-in, first-out Lower of cost or market Modified Accelerated Cost Recovery System Net 30 Net, end-of-month Price-earnings ratio Point of sale Return on investment Securities and Exchange Commission Total quality control Core_Endsheets_Rear.qxd 5/17/08 12:51 PM Page F Classification of Accounts Account Title Accounts Payable Accounts Receivable Accumulated Depreciation Accumulated Depletion Advertising Expense Allowance for Doubtful Accounts Amortization Expense Bonds Payable Building Capital Capital Stock Cash Cash Dividends Cash Dividends Payable Common Stock Cost of Merchandise (Goods) Sold Deferred Income Tax Payable Delivery Expense Depletion Expense Discount on Bonds Payable Dividend Revenue Dividends Drawing Employees Federal Income Tax Payable Equipment Exchange Gain Exchange...
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...to develop the organization's financial reports. (1) Describe what assets value would be if Liabilities are $12,000 and Owners' Equity is $50,000 by showing the Accounting Equation (10 points), and (2) provide an example of two asset accounts that could contain the value. (10 points) | | | Student Answer: | | 1.Assets=Liabilities+Owners Equity 12,000+50000 Assets=62,000 2.Cash and Equipment | | Instructor Explanation: | Textbook pages 11-12. Assets = $12,000 + $50,000 = $62,000. Cash and inventory are examples. | | | | Comments: | | | | Question 2. | Question : | (TCO 1) The financial statements present a company to the public in financial terms. (1) Which financial statement should be prepared first and why (10 points), and (2) explain what information this financial statement provides. (10 points) | | | Student Answer: | | the four basic financial statements are the income statement, statement of owner's equity, statement of cash flows which reports activity for a specific period of time usually a month, quarter or year and the balance sheet which reports balances of certain elements at a specific time. the income statement should be prepared first, it lists revenues and expenses and calculates the company's net income or net losss for a period of time. it lists all the expenses and losses on the debit side and all the income and gains on the creidt side. 2. a financial report indicates sources and amounts of revenues, amount of...
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... *6. Identify the items that are reported in a retained earnings statement. 16, 23, 24 Questions *1. Identify the major characteristics of a corporation. *2. 7. Prepare and analyze a comprehensive equity section. *8. Compute book value per share. B Problems 2, 3, 4, 7, 8, 11, 12 1A, 3A, 6A 1B, 3B 5, 7, 9 11, 12 2A, 3A, 6A 2B, 3B 6, 7, 10, 11, 12, 24 1A, 3A, 6A 1B, 3B 5, 6 13, 14, 15, 16, 25 4A, 5A, 7A 4B, 6B 10, 11 7 17, 18 5A 5B, 6B 8 10, 11, 19, 20, 21, 22, 23, 25 1A, 2A, 3A, 4A, 5A, 6A, 7A, 8A 1B, 2B, 3B, 4B, 5B, 6B, 7B Describe the use and content of the statement of changes in equity. *9 A Problems 12 Study Objectives 9A 25, 26 13 23, 24, 25 3A, 8A 3B, 7B *Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix to the chapter. Copyright © 2011 John Wiley & Sons, Inc. Weygandt, IFRS, 1/e, Solutions Manual (For Instructor Use Only) 11-1 ASSIGNMENT CHARACTERISTICS TABLE Problem Number Difficulty Level Description Time Allotted (min.) Simple 30–40 1A Journalize share transactions, post, and prepare share capital section. 2A Journalize and post treasury share transactions,...
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...interested in information to assist them in projecting future cash inflows and outflows of a business. 2. (a) An asset is a probable future economic benefit owned by the entity as a result of past transactions. (b) A current asset is an asset that will be used or turned into cash within one year; inventory is always considered a current asset regardless of how long it takes to produce and sell the inventory. (c) A liability is a probable debt or obligation of the entity as a result of a past transaction, which will be paid with assets or services. (d) A current liability is a liability that will be paid in cash (or other current assets) or satisfied by providing service within the coming year. (e) Contributed capital is the financing provided to the business by owners; usually owners provide cash and sometimes other assets such as equipment and buildings. (f) Retained earnings are the cumulative earnings of a company that are not distributed to the owners and are reinvested in the business. 3. (a) The separate-entity assumption requires that business transactions are separate from the transactions of the owners. For example, the purchase of a truck by the owner for personal use is not recorded as an asset of the business. (b) The unit-of-measure assumption requires information to be reported in the national monetary unit. That means that each business will account for and report its...
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...items reported in a retained earnings statement. Prepare and analyze a comprehensive stockholders’ equity section. Describe the form and content of corporation income statements. Compute earnings per share. Questions 1, 2, 3, 4, 5, 6, 7, 8 Exercises 1, 2, 3, 4, 5, 6, 7 2. 9, 10, 11, 12, 13, 14 4, 5 6, 8, 9 2A, 3A, 4A 2B, 3B, 4B 3. 14, 15 6, 7 5, 6, 10, 11, 13, 15, 16 1A, 2A, 3A, 4A, 5A 1B, 2B, 3B, 4B, 5B 4. 15, 16 8 12, 13, 14 5. 17 9, 10 12, 14, 15, 16, 17 3A 3B 14-1 ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description 1A 2A Prepare dividend entries and stockholders’ equity section. Journalize and post transactions; prepare retained earnings statement and stockholders’ equity section. Prepare retained earnings statement and stockholders’ equity section, and compute earnings per share. Prepare the stockholders’ equity section, reflecting dividends and stock split. Prepare the stockholders’ equity section, reflecting various events. Prepare dividend entries and stockholders’ equity section. Journalize and post transactions; prepare retained earnings statement and stockholders’ equity section. Prepare retained earnings statement and stockholders’ equity section, and compute earnings per share. Prepare the stockholders’ equity section, reflecting dividends and stock split. Prepare the stockholders’ equity section, reflecting various events. Difficulty Time Level Allotted (min.) Simple Moderate 30–40...
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...interim period. | D. | a quarterly period. | | 6. | The revenue recognition principle dictates that companies recognize revenue in the accounting period in which payment is received. A. | True | B. | False | | 7. | The revenue recognition principle dictates that revenue should be recognized in the accounting records A. | when cash is received. | B. | when performance obligation is satisfied. | C. | at the end of the month. | D. | when it is probable that future economic obligations will be paid and reliable measurement of the amount is possible. | | 8. | The expense recognition principle matches A. | assets with expenses. | B. | expenses with revenues. | C. | assets with liabilities | D. | assets with owner's equity. | | 9. | Which of the following statements about the accrual-basis of accounting...
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...of the following accounts is NOT an example of a liability? A) Wages payable B) Notes payable C) Accounts payable D) Accounts receivable Which of the following accounts is NOT an example of an owner’s equity account? A) Drawing B) Capital C) Additional investments D) Cash Accountants first record transactions in the: A) chart of accounts. B) trial balance. C) journal. D) ledger. Which of the following accounts is an asset? A) Salary expense B) Accounts payable C) Service revenue D) Prepaid expenses Which of the following accounts is a liability? A) Accounts payable B) Prepaid expenses C) Salary expense D) Service revenue Which of the following accounts is an owner’s equity account? A) Accrued Liability B) Accounts Payable C) Prepaid Expense D) Capital Prepaid expenses are recorded as: A) assets. B) liabilities. C) debits and credits. D) capital. Which of the following are accrued expenses? A) Taxes payable B) Interest payable C) Salary payable D) All are accrued expenses 2. 3. 4. 5. 6. 7. 8. 9. 10. Which of the following accounts is an example of a liability? A) Service revenue B) Building 1 C) Accounts receivable D) Notes payable 11. Which of the following is the detailed record of the changes in a particular asset, liability, or owner’s equity? A) Journal B) Trial balance C) Ledger D) Account 12. Which of the following is the book (or printout) holding all the accounts? A) Account B) Trial balance C) Journal D) Ledger 13. Which of the following...
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...Financial Statements The two main end products of accounting are the two financial statements which are presented to investors and creditors outside the business: the Balance Sheet and the Income Statement (which QB calls Profit & Loss). All the other reports you prepare in this course are for internal use by accountants and managers. The Profit & Loss report shows the revenues (QB calls them income) the business earned by performing services or delivering goods to customers during a given period of time, together with the expenses incurred (what was used up) in the process of earning the revenues. Revenues and expenses are both part of owner equity, because the owner is responsible for whatever the business does. Revenues increase the owner’s equity and expenses decrease it; the owner hopes for a net increase in his equity (called a Net Income) but may suffer a net loss from the operation of the business during the period. The Balance Sheet shows, as of a given point in time, the company’s assets and the...
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...Chapter 4- 27 A Elias Real Estate AppraisalIncome Statement | Revenues: | Service Revenue | 48,200 | Expenses: | Insurance Expense | 4,500 | Salaries Expense | 33,300 | Supplies Expense | 600 | Interest Expense | 8,800 | Utilities Expense | 2,200 | Depr. Expense- Building | 7,500 | Total Expenses | 56,900 | Net Income- 8,700 | Elias Real Estate AppraisalStatement of owners’ equityYear Ended June 30, 2014 | Elias Capital, June 1, 2014 - $ 40,500 | Owners contribution $ 0 | Net Loss for the year 8,700 | Total 31,800 | Owner’s withdrawal- 27900 | Elias Capital, June 30, 2014- 3,900 | Elias Real Estate AppraisalClassified balance SheetJune 30, 2014 | Assets | Current Assets: | Cash 4,900 | Account Receivable 5,300 | Office Supplies 2,400 | Prepaid insurance ...
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...WGU - FNC1 FNC1 Exam Question | Answer | Which of the following transactions is not possible | Increase both liabilities and Equity for the same account | A transaction that increases Liabilities and Equity at the same time. | Is not possible | Identifying Transactions, Recording transactions, and communication transactions should be performed in what order? | Identifying, recording, and communicating | The proper order for these transactions are Identifying, recording, and communication | True | Who is an external user of accounting information | Company Customers | Internal users of accounting information are | Sales staff, officers and directors, budget officers | Managers and internal users of accounting information | Service | Managers and internal users of accounting information | Research and development | Managers and internal users of accounting information | Production | Managers and internal users of accounting | Human resource | This person is a manager but is not an internal user of accounting information | Partner in a CPA firm charged with conduction the company's external audit. | The Cost principle | accounting information based on actual cost | The cost principle | Does not take into consideration the actual value of the asset, it only records the actual cost paid for the asset | The going-concept principle | something that remains in operation in the foreseeable future | The business entity principle | requires that a business...
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...stockholders’ equity section of Omar Company consists of common stock $600,000 and retained earnings $900,000. Omar is considering the following two courses of action: (1) declaring a 5% stock dividend on the 60,000, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share. Instructions Prepare a tabular summary of the effects of the alternative actions on the components of stockholders’ equity and outstanding shares. Use the following column headings: Before Action,After Stock Dividend, and After Stock Split. Before Action After Stock Dividend After Stock Split Stockholder’s Equity Paid-in Capital Common Stock $600000 $630000 $600000 In access of Par Value $0 $12000 $0 Total paid-in Capital $600000 $642000 $600000 Retained Earnings $900000 $858000 $900000 Total Stockholders’ equity $1500000 $1500000 $1500000 Outstanding Shares $60000 $63000 $120000 P11-6A Arnold Corporation has been authorized to issue 40,000 shares of $100 par value, 8%, noncumulative preferred stock and 2,000,000 shares of no-par common stock. The corporation assigned a $5 stated value to the common stock. At December 31, 2011, the ledger contained the following balances pertaining to stockholders’ equity. Preferred Stock $ 240,000 Paid-in Capital in Excess of Par Value—Preferred 56,000 Common Stock 2,000,000 Paid-in Capital in Excess of...
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...a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss for a given period, and the value and nature of a firm's assets, liabilities and owners' equity. Accounting provides information on the resources available to a firm, the meansemployed to finance those resources, and the results achieved through their use. Question 2 Explain the process of accounting cycle. Identify the transaction or other recognizable event. Prepare the transaction’s source document such as a purchase order or invoice. Analyze and classify the transaction. This step involves quantifying the transaction in monetary terms (eg ; RM and cents), identifying the accounts that are affected and whether those accounts are to be credited or debited. Record the transaction by making entries in the appropriate journal, such as sales journal, purchase journal, or general journal. Such entries are made in chronological order. Post general journal entries to the ledger accounts. Prepare the trial balance to make sure that debits equal to credits. The trial balance is a listing of all of the ledger accounts, with debits in the left column and credits in the right column. At this point no adjusting entries have been made. The actual sum of each column is not meaningful ; what is important is that the sums to be equal. Correct any discrepancies in the trial balance. If...
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...EXAMINATION 1. Which of the following is the correct accounting equation? A) Assets + Liabilities = Owner’s equity B) Assets = Liabilities + Owner’s equity C) Assets + Revenue = Owner’s equity D) Assets + Revenue = Liabilities + Expenses 2. Which of the following financial statements shows the changes in capital during a period of time? A) Income statement B) Statement of owner’s equity C) Statement of cash flows D) Balance sheet 3. Which of the following financial statements lists the entity's assets, liabilities, and capital as of a specific date? A) Balance sheet B) Statement of owner’s equity C) Income statement D) Statement of cash flows 4. Accounting is the information system that measures business activity, processes the data into reports, and communicates the results to decisions makers. TRUE OR FALSE 5. Accounting is "the language of business." TRUE OR FALSE 6. An obligation that a proprietorship owes to an outside person or agency is called a(n): A) asset. B) liability. C) owner’s equity. D) revenue. 7. An asset account is increased by a debit. TRUE OR FALSE 8. An owner’s equity account is increased by a debit. TRUE OR FALSE 9. Expenses are increases in owner’s equity, caused by providing goods or services for customers. TRUE OR FALSE 10. Accountants first record transactions...
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