Review this chapter’s opening feature involving Adrien Edwards and his TheNakedHippie business. 1. Explain how a classified balance sheet can help Adrien know what bills are due when, and whether he has the resources to pay those bills. 2. Why is it important for Adrien to match costs and revenues in a specific time period? How do closing entries help him in this regard? 3. What objectives are met when Adrien applies closing procedures each fiscal year-end?
> The expanded accounting equation consists of assets, liabilities, capital, withdrawals, revenues, and expenses. It can be used to reveal insights into changes in a company’s financial position. Required 1. Form learning teams of six (or more) members. E
> Assume the following role and describe a situation in which ethical considerations play an important part in guiding your decisions and actions: a. You are an accounting professional with audit clients that are competitors in business. b. You are an acco
> For each of the following (1) identify the type of account as an asset, liability, equity, revenue, or expense, (2) identify the normal balance of the account, and (3) enter debit (Dr.) or credit (Cr.) to identify the kind of entry that would increase
> Pablo Management has five part-time employees, each of whom earns $250 per day. They are normally paid on Fridays for work completed Monday through Friday of the same week. Assume that December 28, 2015, was a Friday, and that they were paid in full on t
> The Adjusted Trial Balance columns of a 10-column work sheet for Planta Company follow. Complete the work sheet by extending the account balances into the appropriate financial statement columns and by entering the amount of net income for the reporting
> On March 1, 2013, a company paid an $18,000 premium on a 36-month insurance policy for coverage beginning on that date. Refer to that policy and fill in the blanks in the following table. Balance Sheet Prepaid Insurance Asset Using Insurance Expens
> Review the Samsung balance sheet in Appendix A. Identify three current liabilities and three noncurrent liabilities in its balance sheet. Samsung’s 2013 Balance Sheet from Appendix A: / /
> Review the Apple balance sheet in Appendix A. Identify three accounts on its balance sheet that carry debit balances and three accounts on its balance sheet that carry credit balances. Apple Balance Sheet from Appendix A: Apple Inc. CONSOLIDATED B
> Define (a) assets, (b) liabilities, (c) equity, and (d) net assets.
> Why does the user of an income statement need to know the time period that it covers?
> Distinguish between cash discounts and trade discounts. Is the amount of a trade discount on purchased merchandise recorded in the accounts?
> Refer to Apple’s financial statements in Appendix A for the following questions. Apple’s Financial Statements from Appendix A: Required 1. What amount of total liabilities does it report for each of the fiscal
> What is the difference between the single-step and multiple-step income statement formats?
> Review the balance sheet of Apple in Appendix A. Identify one asset account that requires adjustment before annual financial statements can be prepared. What would be the effect on the income statement if this asset account were not adjusted? (Number n
> Why do companies offer a cash discount?
> What is an accrued revenue? Give an example.
> Why are the debit and credit entries in the Adjustments columns of the work sheet identified with letters?
> What accounts are affected by closing entries? What accounts are not affected?
> Explain whether an error has occurred if a post-closing trial balance includes a Depreciation Expense account.
> What is the purpose of the Income Summary account?
> Discuss the steps in processing business transactions.
> What is the difference between a note payable and an account payable?
> Refer to this chapter’s opening feature about Apple. Assume that the owners, sometime during their first five years of business, desire to expand their computer product services to meet people’s demands regarding technical support. They eventually decide
> What are the steps in recording closing entries?
> Identify the two main categories of accounting principles.
> Define (a) assets, (b) liabilities, (c) equity, and (d) net assets.
> Describe the three basic forms of business organization and their key attributes.
> Why is the revenue recognition principle needed? What does it demand?
> What work do tax accounting professionals perform in addition to preparing tax returns?
> Identify four kinds of external users and describe how they use accounting information.
> Technology is increasingly used to process accounting data. Why then must we study and understand accounting?
> Explain why investing (assets) and financing (liabilities and equity) totals are always equal.
> Describe the three major business activities in organizations.
> Craig Thorne works in a public accounting firm and hopes to eventually be a partner. The management of Allnet Company invites Thorne to prepare a bid to audit Allnet’s financial statements. In discussing the audit fee, Allnet’s management suggests a fee
> Define return and risk. Discuss the trade-off between them.
> The following six-column table for Solutions Co. includes the unadjusted trial balance as of December 31, 2015. Required 1. Complete the six-column table by entering adjustments that reflect the following information: a. As of December 31, 2015, employ
> The following six-column table for Hawkeye Ranges includes the unadjusted trial balance as of December 31, 2015. Required 1. Complete the six-column table by entering adjustments that reflect the following information. a. As of December 31, 2015, emplo
> Santo Company’s adjusted trial balance on December 31, 2015, follows. Required 1. Prepare an income statement and a statement of owner’s equity for the year 2015, and a classified balance sheet at December 31, 2015.
> Define and explain return on assets.
> The adjusted trial balance of Karise Repairs on December 31, 2015, follows. Required 1. Prepare an income statement and a statement of owner’s equity for the year 2015, and a classified balance sheet at December 31, 2015. There are no
> The adjusted trial balance for Anara Co. as of December 31, 2015, follows. P. Anara invested $40,000 cash in the business during year 2015 (the December 31, 2014, credit balance of the P. Anara, Capital account was $52,800). Anara Company is required t
> The adjusted trial balance for Tybalt Construction as of December 31, 2015, follows. O. Tybalt invested $5,000 cash in the business during year 2015 (the December 31, 2014, credit balance of the O. Tybalt, Capital account was $121,400). Tybalt Construc
> In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank. A. Current assets B. Long-term investments C. Plant assets D. In
> In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank. A. Current assets B. Long-term investments C. Plant assets D. In
> The following unadjusted trial balance is for Power Demolition Company as of the end of its April 30, 2015, fiscal year. The April 30, 2014, credit balance of the owner’s capital account was $46,900, and the owner invested $40,000 cash
> The following unadjusted trial balance is for Ace Construction Co. as of the end of its 2015 fiscal year. The June 30, 2014, credit balance of the owner’s capital account was $53,660, and the owner invested $35,000 cash in the company d
> On July 1, 2015, Lula Plume created a new self-storage business, Safe Storage Co. The following transactions occurred during the company’s first month. July 1 Plume invested $30,000 cash and buildings worth $150,000 in the company. 2 Th
> On April 1, 2015, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company’s first month. April 1 Nozomi invested $30,000 cash and computer equipment worth $20,000 in the company
> Tremor Co. had the following transactions in the last two months of its fiscal year ended May 31. Apr. 1 Paid $2,450 cash to an accounting firm for future consulting services. 1 Paid $3,600 cash for 12 months of insurance through March 31 of the next ye
> Gomez Co. had the following transactions in the last two months of its year ended December 31. Nov. 1 Paid $1,800 cash for future newspaper advertising. 1 Paid $2,460 cash for 12 months of insurance through October 31 of the next year. 30 Received $3,60
> The adjusted trial balance for Speedy Courier as of December 31, 2015, follows. Required 1. Use the information in the adjusted trial balance to prepare (a) the income statement for the year ended December 31, 2015, (b) the statement of ownerâ&
> The adjusted trial balance for Chiara Company as of December 31, 2015, follows. Required 1. Use the information in the adjusted trial balance to prepare (a) the income statement for the year ended December 31, 2015; (b) the statement of
> A six-column table for Yan Consulting Company follows. The first two columns contain the unadjusted trial balance for the company as of December 31, 2015, and the last two columns contain the adjusted trial balance as of the same date. Required Analysi
> A six-column table for JKL Company follows. The first two columns contain the unadjusted trial balance for the company as of July 31, 2015. The last two columns contain the adjusted trial balance as of the same date. Required Analysis Component 1. Analy
> Following is the unadjusted trial balance for Alonzo Institute as of December 31, 2015, which initially records prepaid expenses and unearned revenues in balance sheet accounts. The Institute provides one-on-one training to individuals who pay tuition di
> Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2015, fo
> Natsu Co. follows the practice of recording prepaid expenses and unearned revenues in balance sheet accounts. The company’s annual accounting period ends on October 31, 2015. The following information concerns the adjusting entries that
> Arnez Co. follows the practice of recording prepaid expenses and unearned revenues in balance sheet accounts. The company’s annual accounting period ends on December 31, 2015. The following information concerns the adjusting entries to
> For each of the following entries, enter the letter of the explanation that most closely describes it in the space beside each entry. (You can use letters more than once.) A. To record payment of a prepaid expense. B. To record this periodâ€&#
> The unadjusted trial balance and information for the accounting adjustments of Noseworthy Investigators follow. Each team member involved in this project is to assume one of the four responsibilities listed. After completing each of these responsibilitie
> For each of the following entries, enter the letter of the explanation that most closely describes it in the space beside each entry. (You can use letters more than once.) A. To record receipt of unearned revenue. B. To record this periodâ€
> Roshaun Gould started a web consulting firm called Gould Solutions. He began operations and completed seven transactions in April that resulted in the following accounts, which all have normal balances. Required 1. Prepare a trial balance for this busin
> Yi Min started an engineering firm called Min Engineering. He began operations and completed seven transactions in May, which included his initial investment of $18,000 cash. After those seven transactions, the ledger included the following accounts with
> The accounting records of Tama Co. show the following assets and liabilities as of December 31, 2014 and 2015. Late in December 2015, the business purchased a small office building and land for $300,000. It paid $50,000 cash toward the purchase and a $
> The accounting records of Nettle Distribution show the following assets and liabilities as of December 31, 2014 and 2015. Late in December 2015, the business purchased a small office building and land for $140,000. It paid $100,000 cash toward the purch
> Nuncio Consulting completed the following transactions during June. a. Armand Nuncio, the owner, invested $35,000 cash along with office equipment valued at $11,000 in the new company. b. The company purchased land valued at $7,500 and a building valued
> Business transactions completed by Hannah Venedict during the month of September are as follows. a. Venedict invested $60,000 cash along with office equipment valued at $25,000 in a new sole proprietorship named HV Consulting. b. The company purchased la
> Zucker Management Services opens for business and completes these transactions in November. Nov. 1 Matt Zucker, the owner, invested $30,000 cash along with $15,000 of office equipment in the company. 2 The company prepaid $4,500 cash for six months’ ren
> Denzel Brooks opens a web consulting business called Venture Consultants and completes the following transactions in March. March 1 Brooks invested $150,000 cash along with $22,000 in office equipment in the company. 2 The company prepaid $6,000 cash fo
> At the beginning of April, Bernadette Grechus launched a custom computer solutions company called Softworks. The company had the following transactions during April. a. Bernadette Grechus invested $65,000 cash, office equipment with a value of $5,750, an
> Assume that one of your classmates states that a company’s books should be ongoing and therefore not closed until that business is terminated. Write a half-page memo to this classmate explaining the concept of the closing process by drawing analogies bet
> Aracel Engineering completed the following transactions in the month of June. a. Jenna Aracel, the owner, invested $100,000 cash, office equipment with a value of $5,000, and $60,000 of drafting equipment to launch the company. b. The company purchased l
> Humble Management Services opens for business and completes these transactions in September. Sept. 1 Henry Humble, the owner, invests $38,000 cash along with office equipment valued at $15,000 in the company. 2 The company prepaid $9,000 cash for 12 mon
> Karla Tanner opens a web consulting business called Linkworks and completes the following transactions in its first month of operations. April 1 Tanner invests $80,000 cash along with office equipment valued at $26,000 in the company. 2 The company prep
> The December 31, 2015, adjusted trial balance of Business Solutions (reflecting its transactions from October through December of 2015) follows. Required 1. Record and post the necessary closing entries for Business Solutions. 2. Prepare a pos
> Identify in outline format the three major business activities of an organization. For each of these activities, identify at least two specific transactions or events normally undertaken by the business’s owners or its managers.
> An organization undertakes various activities in pursuit of business success. Identify an organization’s three major business activities, and describe each activity.
> A start-up company often engages in the following activities during its first year of operations. Classify each of the following activities into one of the three major activities of an organization. F. Financing I. Investing O. Operating 1. Providing cli
> A start-up company often engages in the following transactions in its first year of operations. Classify those transactions in one of the three major categories of an organization’s business activities. F. Financing I. Investing O. Operating 1. Owner inv
> All business decisions involve aspects of risk and return. Required Identify both the risk and the return in each of the following activities: 1. Stashing $500 cash under your mattress. 2. Placing a $250 bet on a horse running in the Kentucky Derby. 3.
> All business decisions involve aspects of risk and return. Required Identify both the risk and the return in each of the following activities: 1. Investing $2,000 in a 5% savings account. 2. Placing a $2,500 bet on your favorite sports team. 3. Investin
> On January 20, 2015, Tamira Nelson, the accountant for Picton Enterprises, is feeling pressure to complete the annual financial statements. The company president has said he needs up-to-date financial statements to share with the bank on January 21 at a
> AT&T and Verizon produce and market telecommunications products and are competitors. Key financial figures (in $ millions) for these businesses for a recent year follow. Required 1. Compute return on assets for (a) AT&T and (b) Verizon. 2. Which
> Coca-Cola and PepsiCo both produce and market beverages that are direct competitors. Key financial figures (in $ millions) for these businesses for a recent year follow. Required 1. Compute return on assets for (a) Coca-Cola and (b) PepsiCo. 2. Which c
> Ski-Doo Company manufactures, markets, and sells snowmobile and snowmobile equipment and accessories. The average total assets for Ski-Doo is $3,000,000. In its most recent year, Ski-Doo reported net income of $201,000 on revenues of $1,400,000. Required
> Kyzera manufactures, markets, and sells cellular telephones. The average total assets for Kyzera is $250,000. In its most recent year, Kyzera reported net income of $65,000 on revenues of $475,000. Required 1. What is Kyzera’s return on assets? 2. Does r
> Rivera Roofing Company, owned by Reyna Rivera, began operations in July and completed these transactions during that first month of operations. July 1 Reyna Rivera invested $80,000 cash in the company. 2 The company rented office space and paid $700 cas
> Sanyu Sony started a new business and completed these transactions during December. Dec. 1 Sanyu Sony transferred $65,000 cash from a personal savings account to a checking account in the name of Sony Electric. 2 The company rented office space and paid
> Neva Nadal started a new business, Nadal Computing, and completed the following transactions during its first year of operations. a. Neva Nadal invests $90,000 cash and office equipment valued at $10,000 in the company. b. The company purchased a $150,00
> Lita Lopez started Biz Consulting, a new business, and completed the following transactions during its first year of operations. a. Lita Lopez invests $70,000 cash and office equipment valued at $10,000 in the company. b. The company purchased a $150,000
> Nina Niko launched a new business, Niko’s Maintenance Co., that began operations on June 1. The following transactions were completed by the company during that first month. June 1 Nina Niko invested $130,000 cash in the company. 2 The
> Gabi Gram started The Gram Co., a new business that began operations on May 1. The Gram Co. completed the following transactions during its first month of operations. May 1 G. Gram invested $40,000 cash in the company. 1 The company rented a furnished of
> Key figures for the recent two years of both Apple and Google follow. Required 1. Compute the current ratio for both years for both companies. 2. Which company has the better ability to pay short-term obligations according to the current ratio? 3. Anal
> Following is selected financial information of Kia Company for the year ended December 31, 2015. Required Prepare the 2015 statement of cash flows for Kia Company. Cash used by investing activities $(2,000) 1,200 Net increase in cash .. Cash used by
> The following financial statement information is from five separate companies. Required 1. Answer the following questions about Company V: a. What is the amount of equity on December 31, 2014? b. What is the amount of equity on December 31, 2015? c. Wh
> The following financial statement information is from five separate companies: Required 1. Answer the following questions about Company A: a. What is the amount of equity on December 31, 2014? b. What is the amount of equity on December 31, 2015? c. Wh
> Identify how each of the following separate transactions affects financial statements. For the balance sheet, identify how each transaction affects total assets, total liabilities, and total equity. For the income statement, identify how each transaction
> Identify how each of the following separate transactions affects financial statements. For the balance sheet, identify how each transaction affects total assets, total liabilities, and total equity. For the income statement, identify how each transaction
> What is the purpose of accounting in society?
> Indicate the financial statement on which each of the following items appears. Use I for income statement, E for statement of owner’s equity, and B for balance sheet. a. Services Revenue b. Interest Payable c. Accounts Receivable d. Salaries Expense
