ACCTG 211 Lecture Notes - Lecture 7: Accrual, Bookkeeping

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17 Sep 2015

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Acctg 211 - lecture 7 - the mechanics of an accounting system review. T-accounts are used to demonstrate debits and credits. Debits are on the left, credits on the right. The balance in the accounts on the left side of the equation (assets) will increase with the debits and decrease with the credits. The balance in the accounts on the right side of the equation (liabilities and shareholders" equity) will increase with credits and decrease with debits. Accruals: the action has taken place, but the dollars have not been exchanged. Deferrals: the dollars were already exchanged and the receipt of the cash recorded when the cash was received. The revenue or expense was not recognized at that time. Earned % of revenue (end of period): xx. Deferred expense / prepaid expense (at time cash paid) Step 1: journal entry for what did happen. Step 2: journal entry for what should have happened. Step 3: compare step 1 and step 2.

Related Questions

Identify a business or personal financial transaction. (You canchoose any one you like, it doesn't have to be one in thetextbook). Then answer the following questions which should resultin correctly identifying the accounts to be debited and credited:REQUIRED: 1) What are the specific accounts that are affected?(i.e. Cash, Accounts Receivable, Land, etc.) REMEMBER THAT THEREMUST BE AT LEAST 2 SPECIFIC ACCOUNTS AFFECTED. 2) What BROAD typeof Account do they belong to? (i.e. Asset, Liability or Equity) 3)Does this transaction result in an INCREASE or DECREASE to theaccount(s) in #2 above? 4) Using the rules for Debits and Creditsidentify which SPECIFIC ACCOUNT (#1) is to be debited and which isto be credited. REMEMBER: 1. ASSETS are on the LEFT side of theaccounting equation and therefore they INCREASE on the LEFT, DEBITSIDE; LIABILITIES AND EQUITY are on the RIGHT SIDE of the equationand therefore they INCREASE on the RIGHT, CREDIT side. 2. TOTALDEBITS MUST EQUAL TOTAL CREDITS!

1. Accounts are classified in the ledger

a. chronologically

b. alphabetically

c. in accordance with their appearance in the financial statements

d. so that accounts used most often are listed first

2. Which of the following accounts is an owner's equity account?

a. Cash

b. Accounts Payable

c. Prepaid Insurance

d. Ross Morris, Capital

3. The debit side of an account

a. depends on whether the account is an asset, liability, or owner's equity

b. can be either side of the account depending on how the accountant set up the system

c. is the right side of the account

d. is the left side of the account.

4. Which statement(s) concerning cash is (are) true?

a. cash will always have more debits than credits

b. cash will never have a credit balance

c. cash is increased by debiting

d. all of the above

amaranthpanda447

QUESTION 21 A journal entry for a $75 payment for Rent expensewas posted as a debit to Salary expense and a credit to Cash. Thiserror will cause which of the following conditions on the trialbalance? A. The sum of the credits will equal the sum of thedebits. B. The sum of the debits will exceed the sum of the creditsby $75. C. The sum of the credits will exceed the sum of the debitsby $150. D. The sum of the debits will exceed the sum of thecredits by $150.

QUESTION 22 The business receives cash from a customer that isowed to the company "on account," based on services rendered to thecustomer previously. How does the collection of the cash affect theaccounting equation? A. Assets increase; owner's equity increases.B. Assets increase; liabilities increase. C. Assets decrease;owner's equity decreases. D. One asset increases; one assetdecreases

QUESTION 23 A business completes service to a client and sendsout a sales invoice. The amount will be collected from the customerat a later time. Which of the following would be TRUE at the timewhen the invoice is sent out? A. Total assets will decrease. B. Netincome will increase. C. Owner's equity will decrease. D. Totalliabilities will increase.

QUESTION 24 Which of the following accounts increases with adebit? A. Cash B. Interest Payable C. Accounts Payable D. Smith,Capital

QUESTION 25 The Accounts Receivable account of Nuptials Inc. isshown below. Accounts Receivable Dr Cr 26,000 3,500 5,000 Calculatethe ending balance of the account. A. $33,500 debit B. $31,000,debit C. $3,500, credit D. $27,500, debit

QUESTION 26 The following transactions for the month of Marchhave been journalized and posted to the proper accounts. Mar. 1Martinez invested $9,000 cash in his new design services business.Mar. 2 Paid the first month's rent of $800. Mar. 3 Purchasedequipment by paying $3,000 cash and executing a note payable for$5,000. Mar. 4 Purchased office supplies for $750 cash. Mar. 5Billed a client for $10,000 of design services completed. Mar. 6Received $8,000 on account for the services previously recorded.What is the balance in Cash? A. $13,250 B. $12,450 C. $15,450 D.$14,000

QUESTION 27 Which of the following sequences states the order inwhich a trial balance lists accounts? A. Equity â Assets âLiabilities B. Liabilities â Assets â Equity C. Assets â Equity âLiabilities D. Assets â Liabilities â Equity

QUESTION 28 Which of the following statements is FALSE? A. Atrial balance shows total amounts for assets, liabilities, andequity. B. A trial balance is created before the balance sheet isprepared. C. A trial balance presents data in debit and creditformat, but a balance sheet does not. D. A trial balance showstotal debits and total credits.

QUESTION 29 A promise received from a business's customers topay for goods and services that they received from the business iscalled a(n): A. revenue. B. account receivable. C. account payable.D. expense.

QUESTION 30 You can evaluate the economic resources, debt, andoverall financial position of a company in which of the followingfinancial statements? A. Income statement B. Balance sheet C.Statement of owner's equity D. Statement of cash flows

QUESTION 31 A book holding all of the accounts is called the: A.income statement. B. journal. C. ledger. D. balance sheet.

QUESTION 32 Which of the following groups of accounts BOTHnormally have a debit balance? A. Assets and Liabilities B.Liabilities and Owner's equity C. Revenues and Expenses D. Assetsand Expenses

QUESTION 33 A business buys $500 of supplies on account. Whichaccount is debited? A. Supplies B. Cash C. Service revenue D.Accounts payable

ACCTG 211 Lecture Notes - Lecture 7: Accrual, Bookkeeping

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