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Lecture 3

ACC 100 Lecture Notes - Lecture 3: Office Supplies, Accounts Payable, Retained Earnings


Department
Accounting
Course Code
ACC 100
Professor
Donna Zathy
Lecture
3

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Practice Questions
PQ3-1
Why should you use the Critical and Enhancing Questions when analyzing business activities?
PQ3-2
You start a consulting business on May 1, 20XX and had the below noted transactions during
the month. Analyze the transactions using the critical and enhancing questions and record the
business activities using the expanded accounting equation and account names. The chart is
provided on the next page.
1. The owner invests $2,500 of cash into a business.
2. Borrowed $2,500 from your parents. The loan must be repaid by July 1, 20XX.
3. Registered a business name with Service Ontario, $60, using a credit card. You will pay off
the credit card at the end of this month.
4. Purchased office supplies for $480, plus HST, using a credit card.
5. Paid cash for 500 business cards from Staples for $65.00 plus HST.
6. Received cash from customers for consulting services provided, $730.
7. Attended a one day conference to network. Paid the conference fee of $450, plus HST, using
your credit card.
8. Used up half of the business cards during the conference.
9. At the end of the month you had $375 of office supplies remaining.
10. Paid off your credit card for all business expenses using cash.

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PQ3-2, continued.
Trans. #
Assets
Liabilities
Equity
Owner's
capital
Profit
Dividends
Revenue
Expenses
Cash
Office Supplies
Business license
Accounts
payable
Loan payable
Owner's capital
Service revenue
Conference
Expense
Office supplies
expense
Trans. 1
Trans. 2
Trans. 3
Trans. 4
Trans. 5
Trans. 6
Trans. 7
Trans. 8
Trans. 9
Trans. 10
Total:

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PQ3-3
Why is equipment an asset?
PQ3-4
At the beginning of the year a business has assets of $94,000 and equity of $42,000. During the year
the business had expenses of $89,560, paid dividends of $2,000, and earned revenues of $114,230.
In addition, the assets increased by $19,200. What are total liabilities at the end of the year? Be
sure to show your work!
Liabilities are (insert your amount) $
Calculations (show your work):
If liabilities increased during the year what is the most likely reason for the increase? If liabilities
decreased during the year what is the most likely reason?
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