College Accounting - Accounting Concepts and Procedures ANSWERS TO D...

College Accounting Fourteenth Edition Jeffrey Slater Mike Deschamps Solutions Manual

for

College Accounting:

A practical Approach

By: Robert

Chamberlain Connie Belden Michael P.Griffin 1 / 4

Copyright © 2019 Pearson Education, Inc. 1-1 1 Accounting Concepts and Procedures

ANSWERS TO DISCUSSION QUESTIONS AND

CRITICAL THINKING/ETHICAL CASE

1.The functions of accounting are to analyze, record, classify, summarize, report, interpret, and communicate financial information.

2.Sole proprietorship—1 owner; unlimited liability; easy to form; limited life Partnership—2 or more owners; unlimited liability; easy to form; limited life Corporation—Stockholders; limited liability; difficult to form; unlimited life 3.Businesses are classified as service, merchandise, or manufacturing.

4.Computer technology has greatly reduced the time required for performing the bookkeeping function.

5.The three elements of the basic accounting equation are assets, liabilities, and owner's equity.

6.Capital is the owner's current investment or equity in the assets of a business. It is one subdivision of owner's equity.

7.True. The sum of the left side of the equation (assets) must equal the sum of the right side of the equation (liabilities and owner's equity).

8.False. That is the income statement.

9.False. Revenue is a subdivision of owner's equity.

10.Owner's equity is subdivided into Capital, Withdrawals, Revenue, and Expenses.

11.False. It is a subdivision of owner's equity and records payments of the owner’s personal (non-business) expenses or distributions direct to the owner. It is not a business expense.

12.Reject. As expenses increase, owner's equity decreases.

13.Revenue less Expenses; an income statement shows performance over time.

14.False. It calculates ending capital.

15.The question in this case is whether Paul should be allowed to "pad" his expense account with an additional $100 of expenses. This would be unethical. Paul should only expense those items that are business related. Paul's argument that he is entitled to an additional $100 is not a valid assumption. However, he should be reimbursed for any business expenses during the weekend. 2 / 4

Copyright © 2019 Pearson Education, Inc. 1-2

SOLUTIONS TO CONCEPT CHECKS

1.a. A

• A
• L
• A
• OE
• A

2.a. Liabilities b.Total Assets c.Accounts Payable 3.a. I b.S 4.Total assets = Cash $26,000 + Computer equipment $20,000 = $46,000 5.b. J. Penny, Capital d.J. Penny, Withdrawals f.Advertising Expense g.Taxi Fees Earned 6.c. Accounts Payable d.Grooming Fees Earned 7.a, b, d 8.a. IS b.BS c.BS d.BS e.IS f.IS g.OE h.BS 9.a. OE b.BS c.BS d.IS 3 / 4

Copyright © 2019 Pearson Education, Inc. 1-3

SOLUTIONS TO SET A EXERCISES

1A-1. a. $17,500 = $6,000 + $11,500

• $65,000 = $5,000 + $60,000
• $15,000 = $12,000 + $3,000

1A-2.Assets = Liabilities + Owner’s Equity Cash + Equipment = Accounts + Payable Morgan, Capital

• +124,000 +124,000
• (1,300) +1,300
• +900 +900

1A-3.

RABBIT COMPANY CLEANERS

BALANCE SHEET

SEPTEMBER 30, 201X

Assets Liabilities and Owner’s Equity Cash $67 0 0 0 Liabilities Equipment 7 0 0 0 Accounts Payable $13 0 0 0 13 0 0 0 Total Liabilities

Owner's Equity

• Rabbit, Capital 61 0 0 0

Total Liabilities and Total Assets $74 0 0 0 Owner's Equity $74 0 0 0

• / 4