REVIEW QUESTIONS - © 2017 Cengage Learning. All Rights Reserved. ...

Introduction to Accounting 1 © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

CHAPTER 1

REVIEW QUESTIONS

1.a. profitability and current financial condition b.detailed current information to measure business’s performance c.soundness of business to be able to pay its debt, profitability, debt outstanding, and assets to secure debt d.to determine taxes due and regulations being met—profitability, cash flows, overall financial condition 2.service business 3.partnership 4.manufacturing 5.merchandising 6.sole proprietorship and partnership 7.generally accepted accounting principles (GAAP) 8.The following actions are taken by FASB when developing an accounting standard. Indicate the proper sequence of events by placing a 1 through 5 in the space provided.Step

• The Accounting Standards Update is issued which amends

the FASB Accounting Standards Codification.

• Public hearings are held.
• An exposure draft is issued.
• The issue is placed on FASB’s agenda.
• A Preliminary Views document is issued.

9.corporation 10.Yes, a public accounting firm may provide audit and tax services to the same company if preapproved by the company’s audit committee.

11.Certified Public Accountant (CPA) 12.forensic accounting 13.d Analyzing a Recording c Classifying b Summarizing f Reporting e Interpreting College Accounting, Chapters 1-27, 22e James Heintz, Robert Parry (Solutions Manual All Chapters, 100% Original Verified, A+ Grade) All Chapters Solutions Manual Supplement files download link at the end of this file. 1 / 4

Chapter 2 Analyzing Transactions: The Accounting Equation 3

© 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

CHAPTER 2

REVIEW QUESTIONS

• accounting equation
• business entity
• asset
• liability
• account payable
• owner’s equity
• business entity
• Owner’s Equity
• Liabilities
• Owner’s Equity
• expense
• net income
• net loss
• fiscal year
• drawing
• income statement
• statement of owner’s equity
• balance sheet
• liquidity

EXERCISES

Exercise 1 (a) $24,000 (b) $17,000 (c) $40,000 Exercise 2 (a) $90,000 (c) $60,000 (e) $50,000 (b) $35,000 (d) $55,000 (f) $10,000 Exercise 3 Net income = $7,000 Exercise 4 Owner’s equity = $13,120 Exercise 5 (a) $16,000 (b) $2,880 net income 2 / 4

• Chapter 2

© 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Exercise 6

OWNER’S

ASSETS = LIABILITIES + EQUITY

(a) 15,000 15,000 Bal. 15,000 15,000 (b) (4,000) 4,000 Bal. 15,000 15,000 (c) 9,000 9,000 Bal. 24,000 9,000 15,000 (d) (2,000) (2,000) Bal. 22,000 = 7,000 + 15,000

Exercise 7

ASSETS = LIABILITIES + OWNER’S EQUITY

(Items Owned) (Amts. Owed) (Owner’s Investment) (Earnings) Accounts Glen Ross, Glen Ross, Cash Payable Capital – Drawing + Revenues – Expenses Description Bal. 28,000 8,000 20,000 (a) 4,000 4,000 Service Fees (b) (1,200) 1,200 Rent Exp.(c) (200) 200 Utilities Exp.(d) (600) 600 Bal. 30,000 = 8,000 + 20,000 − 600 + 4,000 − 1,400

30,000 = 30,000 3 / 4

Chapter 2 Analyzing Transactions: The Accounting Equation 5

© 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Exercise 8 1.

ASSETS = LIABILITIES + OWNER’S EQUITY

(Items Owned) (Amts. Owed) (Owner’s Investment) (Earnings)

Office Accounts J. Moore, J. Moore, Cash + Equipment = Payable + Capital – Drawing + Revenues – Expenses Description (a) 10,000 10,000 (b) 5,500 5,500 (c) 900 900 Service Fees (d) (6,000) 6,000 (e) 1,500 1,500 Service Fees (f) (800) 800 Rent Exp.(g) (75) 75 Phone. Exp.(h) (100) (100) (i) (500) 500 Bal. 4,925 + 11,500 = 5,400 + 10,000 − 500 + 2,400 − 875

16,425 = 16,425

2.Total assets................................................................. $ 16,425 Total liabilities........................................................... $ 5,400 Owner’s equity........................................................... $ 11,025 Owner’s equity in excess of original investment....... $ 1,025 Total revenues............................................................ $ 2,400 Total expenses............................................................ $ 875 Net income................................................................. $ 1,525

• / 4