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Copyright © 2017 Pearson Education Inc. Chapter 2 Transaction Analysis 2-1 Chapter 2

Transaction Analysis

Ethics Check (5-10 min.) EC 2-1

• Due care
• Integrity
• Due care
• Objectivity and independence

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Financial Accounting 11/e Solutions Manual Copyright © 2017 Pearson Education Inc. 2-2 Short Exercises

(5 min.) S 2-1

• No (no dollars involved)
• Yes
• No (no dollars involved yet)
• Yes
• Yes
• Yes
• No
• Yes

(5 min.) S 2-2

• L
• E
• A
• L
• E
• A
• A
• L
• A
• E

Copyright © 2017 Pearson Education Inc. Chapter 2 Transaction Analysis 2-3 (10 min.) S 2-3

G 1. Debit A 2. Expense F 3. Net income C 4. Ledger D 5. Posting I 6. Normal balance J 7. Payable E 8. Journal H 9. Receivable B 10. Owners’ equity

(5 min.) S 2-4

Anderson’s payment was not an expense.

Anderson acquired an asset, Equipment, because the computer is an economic resource of the business.

Financial Accounting 11/e Solutions Manual Copyright © 2017 Pearson Education Inc. 2-4 (5 min.) S 2-5

• Purchase of asset on account

Borrow money

• Declaration and payment of dividends to owners

Expense transaction (ex: r eceived and paid utility bill)

• Pay a liability

Return an asset purchased on account

• Issuance of stock

Revenue transaction (ex: provided services on account or for

cash)

• Purchase of asset for cash

Sale of asset for cash Collection of an account receivable

(Answers may vary.)

(5 min.) S 2-6

Assets Liabilities Stk. Equity Incr Decr Incr Decr Incr Decr

Jan 2 X X Jan 4 X X Jan 10 X X Jan 1 5 X X Jan 18 X X Jan 21 X X Jan 31 X X