Accounting > EXAM > Accounting cp1-4. Questions and A+ Answers (All)

Accounting cp1-4. Questions and A+ Answers

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Accounting Account A system of recording, classifying, and summarizing financial transactions Users of financial information External users Ethics beliefs that distinguish right from wrong. They are accepted standards of good and bad behavior. Ethics process Accounting principles Measurement principle Accounting information is based on cost with potential subsequent adjustments to fair value revenue recognition principle 1.Revenue is earned and recognized upon product delivery or service completion, no matter when cash is received. 2.Recognize revenue when it is earned Accounting assumptions Going concern assumption Means that accounting information reflects a presumption that a business will continue operating instead of being closed or sold, that implies for example that property is reported at cost instead of say liquidation values that assume closure. Monetary unit assumption Time period assumption Assumption that an organization's activities can be divided into specific time periods such as months. Business entity assumption Sole proprietorship Partnership corporation Accounting Equation Assets Liabilities Amounts owed to creditors Equity Exercise 1-8 --------------------------------------------------------------- At the beginning of the year addiosn company's assets are $300,000 and its equity is 100,000 during the year assets increase 80,000 and liabilities increase 50,000 wha is the equity at the end of the year -------------------------------------------------------------- At the beginning of the year Quaker liabilities equal 70,000 during the year assets increased by 60,000 and at year and at year end assets equal 190,000. liabilities decrease 5,000 during the year what are the beginning and ending amounts of equity? ----------------------------------------------------------------- -------------------------------------------------------------- Beginning assets = end year - beginning year asset 190,000 - 60,000 = 130,000 Liabilities = 70,000 130,000 - 70,000 = 60,000 The change Assets = 60,000 Liabilities = 5000 Past equity + the change in liabilities Equity = 65,000 No add in all of them 130,000 + 60,000 = 70,000 - 5,000 = 65,000 Equity Source documents identify and describe transactions and events entering the accounting process Account General ledger Asset accounts Cash Account receivable Note receivable prepaid accounts are assets that represent prepayments of future expenses Equation Supplies Accounts Equipment Accounts Building accounts Land accounts Liability accounts Account payable Note Payable Unearned Revenue Accounts Equity accounts Owner Investments Owner Withdrawals Revenue Accounts Revenue and expenses also impact equity Expense Accounts are advertising expenses , store supplies office salaries utility rent insurance and office supply expenses The 4 parts needed in journal entree are? Date of transaction title of accounts Dollar amount of each debit and credit Explanation of the transacion Dr. CR. effect Assets Euity Owner cap Dr for decrease - Revenue Adjusting entry Accrued expenses Contra account

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