Prepare a trial balance and explain its purposes. Simple 20—30 2A Journalize transactions, post, and prepare a trial balance. Simple 30—40 3A Journalize and post transactions and prepare a trial balance. Moderate 40—50 4A Prepare a correct trial balance. Moderate 30—40 5A Journalize transactions, post, and prepare a trial balance. Moderate 40—50 1B Journalize a series of transactions. Simple 20—30 2B Journalize transactions, post, and prepare a trial balance. Simple 30—40 3B Journalize transactions, post, and prepare a trial balance.
Moderate 40—50 4B Prepare a correct trial balance. Moderate 30—40 5B Journalize transactions, post, and prepare a trial balance.
Moderate 40—50 3. Q E 2. E Q 6. A T account has the following parts: a the title, b the left or debit side, and c the right or credit side. The terms debit and credit mean left and right respectively. Tom is incorrect. The double-entry system merely records the dual effect of a transaction on the accounting equation. A transaction is not recorded twice; it is recorded once, with a dual effect.
Olga is incorrect. A debit balance only means that debit amounts exceed credit amounts in an account. Conversely, a credit balance only means that credit amounts are greater than debit amounts in an account.
Thus, a debit or credit balance is neither favorable nor unfavorable. Expenses and dividends are increased by debits and decreased by credits. The basic steps in the recording process are: 1. Analyze each transaction for its effect on the accounts.
Enter the transaction information in a journal. Transfer the journal information to the appropriate accounts in the ledger. Questions Chapter 2 Continued The advantages of using the journal in the recording process are: a It discloses in one place the complete effects of a transaction. When three or more accounts are required in one journal entry, the entry is referred to as a compound entry. An example of a compound entry is the purchase of equipment, part of which is paid for with cash and the remainder is on account.
It discloses in one place the complete effects of a transaction. It provides a chronological record of all transactions. It helps to prevent or locate errors because the debit and credit amounts for each entry can be easily compared.
The advantage of the last step in the posting process is to indicate that the item has been posted. The chart of accounts is important, particularly for a company that has a large number of accounts, because it helps organize the accounts and define the level of detail that a company desires in its accounting system. A trial balance is a list of accounts and their balances at a given time. Every textbook comes with a day 'Any Reason' guarantee.
Note: Chegg does not guarantee supplemental material with textbooks e. CDs, DVDs, access codes, or lab manuals. They believe most financial accounting textbooks fail to demonstrate that accounting is an exciting field of study and one that is important to future careers in business. When writing this text, they considered career relevance as their guide when selecting material, and the need to engage the student as their guide to style, pedagogy, and design.
Students and instructors have responded very favorably to the use of focus companies and the real-world financial statements. The companies chosen are engaging and the decision-making focus shows the relevance of financial accounting regardless of whether or not the student has chosen to major in accounting. Most faculty agree that mastery of the accounting cycle is critical to success in financial accounting.
And yet all other financial books introduce and develop transaction analysis in one chapter, bombarding a student early in the course with an overload of new concepts and terms. By slowing down the introduction of transactions and giving students time to practice and gain mastery, this building-block approach leads to greater student success in their study of later topics in financial accounting such as adjusting entries.
Which of the following is true regarding the income statement? The income statement is sometimes called the statement of operations. The income statement reports revenues, expenses, and liabilities. The income statement reports only revenue for which cash was received at the point of sale.
The income statement reports the financial position of a business at a particular point in time. Hint: Use the notes. Required: 1. What subtotals does Urban Outfitters report on its income statement? Were operating activities or financing activities the major source of cash for these expenditures?
Occlusion 8th eighth edition Pmbok 6th edition free download torrent Ouran high. Remembers inside kremlin politics Financial accounting 7th edition libby. They believe most financial accounting textbooks fail to demonstrate that accounting is an exciting field of study and one that is important to future careers in business. When writing this text, they considered career relevance as their guide when selecting material, and the need to engage the student as their guide to style, pedagogy, and design.
Students and instructors have responded very favorably to the use of focus companies and the real-world financial statements. The companies chosen are engaging and the decision-making focus shows the relevance of financial accounting regardless of whether or not the student has chosen to major in accounting.
Most faculty agree that mastery of the accounting cycle is critical to success in financial accounting. And yet all other financial books introduce and develop transaction analysis in one chapter, bombarding a student early in the course with an overload of new concepts and terms.
The authors believe that most faculty take more time with the accounting cycle, but other financial accounting textbooks don't. Faithful representation——requires information to be complete, neutral, and free from error 3. Qualitative aspects that enhance the usefulness of information that is relevant and faithfully representative include: comparability, verifiability, timeliness, and understandability C.
Recognition and Measurement Concepts 1. Separate-entity assumption——business transactions are accounted for separately from the transactions of owners 2. Going concern assumption also called continuity assumption ——unless there is evidence to the contrary, business is expected to continue operating into the foreseeable future 3. Monetary unit assumption——each business entity accounts for and reports its financial results primarily in terms of the national monetary unit without any adjustments for changes in purchasing power 4.
Mixed-attribute measurement model: a. Applied to measuring different assets and liabilities b. Most balance sheet elements are recorded at their cost historical cost , which is the cash-equivalent value on the date of the transaction D. Elements of the Balance Sheet 1. Assets——probable future economic benefits owned or controlled by an entity as a result of past transactions or events.
Assets are listed in order of liquidity——how soon an asset is expected by management to be turned into cash or used i. Current assets —will be used or turned into cash within one year ii.
All other assets are considered long term or noncurrent ; that is, they are to be used or turned into cash after the coming year. Liabilities——probable future sacrifices of economic benefits arising from present obligations of a business to transfer cash or other assets or to provide services as a result of past transactions or events a.
Creditors——entities that a company owes money b. Liabilities are usually listed on the balance sheet in order of maturity how soon an obligation is to be paid i. Current liabilities——obligations that will be settled by providing cash, goods, other current assets, or services within the coming year ii. All other liabilities are considered long term or noncurrent 4. Financing provided by owners——referred to as contributed capital b.
Financing provided by operations——referred to as earned capital or retained earnings i. When companies earn profits, they can be distributed to owners as dividends or reinvested in the business; the portion of profits reinvested in the business is called retained earnings ii.
Companies with a growth strategy often pay little or no dividends to retain funds for expansion. LO Identify what constitutes a business transaction and recognize common balance sheet account titles used in business. Nature of Business Transactions 1. A transaction is: a. An exchange of assets or services for assets, services, or promises to pay between a business and one or more external parties to a business or b.
A measurable internal event such as the use of assets in operations 2. Only economic resources and debts resulting from past transactions are recorded on the balance sheet External events——exchanges of assets, goods, or services by one party for assets, services, or promises to pay liabilities by one or more other parties. Internal events——include certain events that are not exchanges between the business and other parties but nevertheless have a direct and measurable effect on the entity c.
Some important events have a future economic impact on a company, but are not reflected in the financial statements e. Accounts 1. Account——a standardized format that organizations use to accumulate the dollar effect of transactions on each financial statement item 2. Every company creates its own chart of accounts to fit the nature of its business activities 4. The accounts in the financial statements of large companies are actually summations of a number of specific accounts in their recordkeeping system.
How Do Transactions Affect Accounts? Principles of Transaction Analysis 1. Transaction analysis is the process of studying a transaction to determine its economic effect on the entity in terms of the accounting equation 2. Two principles underlying the transaction analysis: a. Every transaction affects at least two accounts; correctly identifying those accounts and the direction of the effect increase or decrease is critical b.
The accounting equation must remain in balance after each transaction 3. Dual effects concept——every transaction has at least two effects on the basic accounting equation 4. Most transactions with external parties involve an exchange by which the business entity both receives something and gives up something in return a. If Chipotle purchases tomatoes for cash, it receives food supplies an increase in an asset and gives up cash a decrease in an asset b.
If Chipotle purchases tomatoes on credit that is, money is owed to suppliers for cash, it would engage in two separate transactions at different points in time i. It receives food supplies an increase in an asset and gives a promise to pay later an increase in a liability ii. Later, It pays cash a decrease in an asset and eliminates the promise a decrease in a liability.
Not all important business activities result in a transaction that affects the financial statements i. Most importantly, signing a contract involving the exchange of two promises to perform does not result in an accounting transaction that is recorded ii.
For example, if Chipotle sent an order for tomatoes to its food supplier and the supplier accepted the order but did not fill it immediately, no transaction took place 5. Balancing the Accounting Equation a. Step 1: Ask——What was received and what was given? Identify the account affected by title, making sure that at least two accounts change ii. Step 2: Verify——Is the accounting equation in balance? Related terminology i.
Par value——a legal amount per share established by the board of directors; it represents the minimum amount a stockholder must contribute and has no relationship to the market price of the stock ii.
Common stock——the account that is equal to the number of shares issued by a corporation times the par value per share iii. Additional paid-in capital or Paid-in Capital or Contributed Capital in Excess of Par ——the amount of capital contributed by the shareholders less the par value of the stock a.
Step 1: What was received and what was given? Step 2: Is the accounting equation in balance? LO Determine the impact of business transactions on the balance sheet using two basic tools: Journal entries and T-accounts. The accounting cycle——the process followed by entities to analyze and record transactions, adjust the records at the end of the period, prepare financial statements, and prepare the records for the next cycle; during the accounting cycle: 1. Transactions are analyzed and recorded in the general journal in chronological order 2.
The related accounts are updated in the general ledger B. The Direction of Transaction Effects 1. Increases in asset accounts are on the left because assets are on the left side of the accounting equation b. Names for each side of an account: a. Debit dr is on the left side of the T b. Credit cr is on the right side of the T 3.
Rules for increases and decreases: a. Asset accounts increase on the left debit side and they normally have debit balances b. Summary: Assets Increase with debits Accounts have debit balances.
If the correct accounts and effects are identified, the accounting equation will remain in balance because the total debits will equal the total credits in a transaction C.
Analytical Tools: 1. Transactions are recorded in chronological order in a general journal or simply, journal 2. Journal entry——an accounting method for expressing the effects of a transaction on accounts in a debits-equalcredits format a.
It is useful to include a date or some form of reference for each transaction b. The debited accounts are written first on top with the amounts recorded in the left column c. The credited accounts are written below the debits and are usually indented with the credited amounts written in the right column d.
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