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Tutorial 1 Questions

Lecture

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212 views9 pages

Tutorial 1 Questions

Lecture

Uploaded by

Dylan Rabin Pereira
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF or read online on Scribd
7. Describe the similarities and differences among the four different types of business entities discussed in che chapter. 8. A business purchases an acre of land for $5,000. The current market value is $5,550, and che land was assessed for property tax purposes ac $5,250. What value should the land be recorded at, and which accounting principle supports your answer? 9. ‘What does the going concern assumption mean fora business? 10, ‘Which concept staes that accounting information should be complete, neuttal, and fire from material evo 11, Financial statements in che United States are reported in U.S, dollars, What assumption supports this sacement? 12, Explain the role of the International Accounting Standards Board (IASB) in relation to International Financial Reporting Standards (IFRS). 13, What is che accounting equation? Briefly explain ench of the chee parts, 14. Explain che three secrions in the statement of cash flows. 15, Differensiate beoween income statement and balance sheet 1G, Whac are the steps used when analyzing a business transaction? 17, What is che staremene of owner’ equicy? 18, Wha he calculaion for rerurn on assets (ROA)? Explain what ROA measures. Learning Objective 1 sets of accounting information GBB 5 cach user of accounting information, identify ifthe user would use financial accounting (FA) or managerial accounting (MA). a. investor €. controler b. banker ” stockholder e. Invemal Revenue Service | human resources director dd, manager ofthe business fh, credicor S1-2 Determining organizations that govern accounting Suppose you ate strting a business, Wholly Shits, to imprint logos on Tshirts. In organizing the business and setting up its zecounting records, you take your informa- tion to a CPA to prepare financial statements for che bank. Name the organization ‘hae governs the majority ofthe guidelines thatthe CPA will use to prepare financial statements for Wholly Shirts. What ace chose guidelines called? Learning Objective 2 (@BAI, Lee and Ah Beng are brochers who plan to start a business designing websives for people, When they tied co register their busines, they were asked what type of business organization this was to be. They would like ro know the advantages and dlisadvantages of starting a partnership as they alzo have che choice of setting up 2 Private Limited organizaion, What would you recommend? Learning Objective2 _S1-4 Identifying types of business organizations ‘Ah Soh, is Ah Lee and Ah Beng’ siser from question $1-3, She currently runs a bakery from her home. She suggests chat she diversify her company to include web design and her brothers can work under her company as employees. What do you chink? Accounsing and the Business Enviconment 55 81.5 Applying accounting assumptions and principles Learning Objective 2 Shariah Mohammad i che proprietor of 2 boolishop near che General Hospital.The business has been in operatioa for abou 4 years now. She bought the double-storey shoplo where the bookshop is located for $200,000 for which she took a 70% loan fiom the hank. She currently still owes the bank another $1 10,000. The business has fornitate that cose $12,000 but is valued currenely at $15,000. Sharif owes her sup- plies $8,500 and che business has eah of $4,000. She personally owns an aparrmene vad at $320,000 andl she has a personal bank overdraft of $5,000, Idenify the prin- cipke or assumption discussed inthe chapter that best mazches the situation: a. ‘The furniture inthe bookshop is to be recorded in the business books atthe cas of $12,000 alhaugh iis worth $15,000 f sold lise her bank overdrafe or aparement in the bookshop’ statement b Sharah does n ‘of nancial position. «. Shasfah does no foresee any reason that che busines wll terminate and al her transactions are recorded co reflec cis expectation. 4. The business transactions are recorded in US Dolla S1-6 Using the accounting equation Learning Objective 3 It Hair Saloon lists its roral liabilities as of roday as $74,000 andl its equicy as $23,500, Requirements aa 1. Calculate the busines coal assets using che accounting equation. 2. I the capital accoune only had $10,000 ac the beginning ofthe year and the cower made no withdrawals, did the business make a profic or loss cis year and by whaeamoune? S1-7 Using the accounting equation Learning Objective 3 © | 4 Stationery Supplies repores the following financial information: ining ofthe year § 28,000 CCopital atthe Assos 76,000 ables 33,800 Revenues Expenses Requirements 1. Using the accouncing equation, did «S@ ner make any withdrawals or additional capital invesemenc dusing the year and if so by whee amount? 2. Whats Lins Stationery Supplies toxal equiry ac che end of che yeat? -8 Identifying accounts Learning Objective 3 2 PP onsider the following accounts: 2 Ascounes Payable f. Service Revenue b, Cash & Office Supplies Owner, Capieal b, Owner, Wichdrawals 4. Accounts Receivable i Land ce. Rene Expense j- Salaies Expense Identify each aecoune as Asst (A), Liabilcy (L), ot Equity (E). 31 56 chapter 1 Leaming Objective 4 _S1-9 Using the accounting equation to analyze transactions ny Town Kennel earns service revenue by caring for the pets of customers. Tiny ‘Town Kennel is owned and operated by Edward’ Maxdale. During the past month, Tiny Town Kennel has the following transactions: Reoeived $520 cash for service revenue earned. b, Paid $325 cash For salaries expense. c. Maxdale contribueed $1,000 co the business in exchange for capital d. Earned $640 for service evenue, but the customer has not paid Tiny Town Kennel yet Received utility bill of $85, which will be paid next month, © Maxdale withdrew $100 cash ~ Indicate the effects of the business transactions on the accounting equation for Tiny ‘Town Kennel, Teansaction (a) is answered as a guide. 4 Increase aset (Cas); Inerease equity (Service Revenue) Learning Objective 4 S1-10 Using the accounting equation to analyze transactions laine’ Inflatables earns service revenue by providing party planning servi inflatable playscapes. Elaine's Inflacables is owned and operated by Elaine uring the past month, Elaine’ Inflatables had the following transactions: . Gibson contributed $10,000 to the business in exchange For capital. bs Purchased equipment for $5,000 on secount. Paid $400 for office supplies. d. Barned arid received $2,500 cash for service even, Paid $400 For wages to employees. £. Gibson withdrew $1,000 cash, 83, Earned $1,000 for services provided. Customer has not yet paid, h, Paid $1,000 for rent. i, Received a bill for $250 for the monthly utilities. The bill has not yet been pai. Indicate the effecs ofthe business transactions on the accounting equation for Eline’ Inflacables. Tansaction (a) is answered asa guide, ‘4 Increase aset (Cash): Invease equity (Gibson, Capital) Leaming Objective 5 SI-11 Identifying accounts on the financial statements Consider the following accounes: a. Accounts Payable £. Service Revenue b. Cash & Office Supplies & Owner, Capital bh. Ownes, Withdrawals d._ Accounts Receivable i Land e. Rent Expense jj Salaries Expense Identify the financial statement (or statements) that each accoune would appear ‘on, Use I for Income Statement, OE for Statement of Owners Equity, and B For Balance Sheet. EL19 Using accounting vocabulary Learning Objectives 3, 5 GRE, sider the following accounting terms and definisions, and match each term to che definition: “1, Accounting equation a, An economic resource that is expected to be of benefit in 5 psset the future Balance sheet ‘Debts that are owed to creditors «. Exces of total expenses over total revenues come statement

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