Why is accounting often referred to as the “language of business”?
Chapter 1
5. Why is accounting often referred to as the “language of business”?
7. What are generally accepted accounting principles (GAAP)? Who currently develops and issues GAAP? What is the purpose of GAAP?
Chapter 3
Practice Exercises
For 3-1 and 3-2 do the following transactions:
a. list the accounts impacted by the transaction
b. for each account indicate whether the transaction increased or decreased the account
c. for each account indicate how much the transaction increased or decreased account amount
d. compute the impact of the transaction on total assets, total liabilities, and total owners’ equity.
Impact of a Transaction
3-1
The company borrowed $125,000 in cash from Far West Bank
3-2
The company used $45,000 in cash to purchase land on the Westside of Hatu Lake.
Journal Entries
3-11
Refer to 3-1 make the journal entry necessary to record the transaction
3-12
Refer to 3-2 make the journal entry necessary to record the transaction
Posting
3-16
Refer to journal entries made in 3-11 and 3-12. Construct a T-account representing each account impacted by the two transactions. Post all journal entries to these T-accounts. Compute the ending balance in each account. Assume that the beginning balance in each T-account is zero.
Preparing a Trial Balance
3-19
Refer to the T-account constructed in 3-16. Using the ending balance in those T-accounts, construct a trial balance
Chapter 3 pg 123
The following journal entries are from the books of Kara Elizabeth Company
a. Buildings…………………………..90,000
Cash…………………………………..35,000
Mortgage Payable……………………..55,000
b. Cash………………………………….25,000
Capital Stock…………………………….25,000
c. Cash………………………………….40,000
Loan Payable……………………………40,000
d. Salary Expense…………………………12,000
Cash………………………………………12,000
e. Inventory………………………………..12,500
Accounts Payable…………………………………12,500
f. Accounts Receivable………………………84,000
Sales………………………………………………84,000
Cost of Goods Sold……………………51,000
Inventory………………………………………………….51,000
g. Cash……………………………………………….62,000
Accounts Receivable……………………………………….62,000
h. Accounts payable……………………………………38,000
Cash……………………………………………………38,000
For each of the journal entries prepare an explanation of the business event that is being represented.
Chapter 4
7. Why are adjusting entries necessary?
9. The analysis process for preparing adjusting entries involves two basic steps. Identify the two steps and explain why both are necessary.
15. What is the purpose of a closing entries?
16. What is the purpose of the post-closing trial balance? Explain where the information for the post-closing trial balance comes from.
