A few sentences per question. No plagiarism, All sources must be sited.
Question 1:
Describe the basic characteristics of the cash basis and the accrual basis of accounting.
How are revenues and expenses reported on the income statement under the cash basis of accounting and the accrual basis of accounting?
What differences exist when assets, liabilities, and equities are recorded under each of the two bases of accounting?
Question 2:
Which events during an accounting period trigger the recording of normal journal entries and which event triggers the making of adjusting entries? Please explain why adjusting entries are necessary at the end of an accounting period.
Identify the four different types of adjusting entries frequently required at the end of an accounting period.
Question 3:
Give an example of an adjusting journal entry for each of the following transactions. Provide three correct responses:
Equal growth of an expense and a liability.
Earning of revenue that was previously recorded as unearned revenue.
Equal growth of an asset and revenue.
Increase in an expense and decrease in an asset.
Give an example of an adjusting journal entry for each of the transactions. Provide four correct responses.
Question 4:
Classify the following items as (a) prepaid expense, (b) unearned revenue, (c) accrued revenue, or (d) accrued expense. Provide six or seven correct responses:
A three-year premium paid on a fire insurance policy.
Fees earned but not yet received.
Fees received but not yet earned.
Salary owed but not yet paid.
Subscriptions received in advance by a magazine publisher.
Supplies on hand at the end of an accounting period.
Taxes owed but payable in the following accounting period.
Utilities owed but not yet paid.
Classify the items mentioned as (a) prepaid expense, (b) unearned revenue, (c) accrued revenue, or (d) accrued expense. Provide eight correct responses.
Question 5:
Describe the difference between depreciation expense and accumulated depreciation.
Describe the formula used for computing the straight line depreciation for a depreciable asset. Explain how to calculate an asset’s book value.
The balance in the equipment account is $1,375,000, and the balance in the accumulated depreciation—equipment account is $725,000.
What is the book value of the equipment and does that amount mean that the equipment has a loss in real value of $725,000? Explain your response.
Question 6:
You have taken over a set of accounting books for a small business as a part-time job. At the end of the first accounting period, you have partially completed the work sheet by entering the proper ledger accounts and balances in the Trial Balance columns. You turn to the manager and ask, “Where is the list of additional information I can use in entering the adjusting entries?” The manager indicates there is no such list. In all the text problems you have done, you have always been given this information. How would you obtain the information for this real-life situation?
What are the consequences of not making all of the required adjustments at the end of the accounting period?
Question 7:
After the Adjusted Trial Balance columns of a work sheet have been totaled, which account balances are extended to the Income Statement columns, the Statement of Retained Earnings columns, and the Balance Sheet columns?
Describe how is the statement of retained earnings prepared.
Question 8:
Describe, in order, the four basic steps in the closing process performed at the end of each accounting period.
Explain why the closing process is so important.
After the closing process has been completed, what account types remain open?
Question 9:
Describe how a classified balance sheet is different from a basic unclassified balance sheet.
List the major categories of accounts that would appear under assets, liabilities, and stockholder’s equity on a classified balance sheet.
Rearrange the following steps in the accounting cycle in proper order:
Financial statements are prepared.
An adjusted trial balance is prepared.
Adjustment data are assembled and analyzed.
Adjusting entries are journalized.
Closing entries are journalized and posted to the ledger.
An unadjusted trial balance is prepared.
Transactions are posted to the ledger.
Transactions are analyzed and recorded in the general journal.
An optional end-of-period work sheet is prepared.
A post-closing trial balance is prepared.
Question 10:
Describe how the current ratio is used to analyze financial results?
What are the components of the ratio and how is the ratio calculated?
What does the ratio indicate regarding a company’s financial position?
Current assets and current liabilities for the Fortson Company are:
Current assets: 2013—$262,500; 2014—$310,500.
Current liabilities: 2013—$150,000; 2014—$172,500.
Determine the current ratio for 2013 and 2014. Does the change in the current ratio from 2013 to 2014 indicate a favorable or unfavorable trend?
Question 1:Describe the basic characteristics of the cash basis and the accrual basis of accounting.Cash basis is where revenues and costs are recognized when received or paid.Accrual basis is…
