ACCT 225 Chapter Notes - Chapter 1-2: Debt Ratio, Revenue Recognition, Source Document

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raspberryalligator834

8 Feb 2016

School

Department

Accounting

Course

ACCT 225

Professor

Allwright

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Document Summary

Owner"s equity + revenues building, land, supplies, and accounts receivable) Accounting equation = assets + expenses + dividends = liabilities + Assets = is something of value a business owns or has title to (cash, Balance sheet = is prepared as of a point in time not a period in time. Business entity assumption = a business is accounted for separately from. Cost principle = based on actual cost, cost is measured on a cash or equal- other business entities to-cash basis, cost of services received is measured as the amount of cash paid. Dividends = distributions of assets to the owners (stockholders) and decreases assets and total equity. Dodd-frank act = was passed to promote accountability and transparency in the financial system, put an end to the notion of too big to fail, protect the taxpayer by ending bailouts, and protect consumers from abusive financial services. Equity = business owners claims on the assets of a business.

Related Questions

1. Creditors' claims on the assets of a company are called: (Points : 2)

2. The primary objective of financial accounting is: (Points : 2)

To serve the decision-making needs of internal users

To provide financial statements to help external users analyze and interpret an organization's activities

To monitor and control company activitiesTo provide information on both the costs and benefits of managing products and services

To know what, when and how muchto produce

3. Assets created by selling goods and services on credit are: (Points : 2)

4. The debt ratio is used: (Points : 2)

To measure the amount of equity relative to the expenses

To reflect the risk associated with a company's debts

Only by banks when a business applies for a loan

To determine how much debt a firm should pay off

5. Net Income: (Points : 2)

Decreases equity

Represents the amount of assets owners put into a business

Equals assets minus liabilities

Is the excess of revenues over expenses

Represents the owners' claims against assets

6. Internal users of accounting information include: (Points : 2)

Shareholders

Customers

Creditors

Government regulators

Line Supervisor

7. Risk is: (Points : 2)

Net income divided by average total assets

The reward for investment

The uncertainty about the expected return that will be earned from an investment

Unrelated to expected return

8. An example of an operating activity is: (Points : 2)

Paying wages

Purchasing office equipment

Borrowing money from a bank

Selling stock

Paying off a loan

9. Which accounting assumption assumes that all accounting information is reported monthly or yearly? (Points : 2)

Business entity assumption

Monetary unit assumption

Value assumption

Cost assumption

Time period assumption

10. Distributions of assets by a business to its stockholders are called: (Points : 2)

1. Which of the following is a distinguishing characteristic of a nonbusiness organization?

Select one:

a. There is an absence of ownership interests that can be sold, transferred, or redeemed.

b. It does not depreciate its capital assets.

c. It does not charge fees for any of its services.

d. Its revenues do not exceed its expenses

2. For which type of organizations is the Financial Accounting Standards Board (FASB) responsible for establishing accounting and financial reporting standards?

Select one:

a. Business-type organizations only.

b. Business-type organizations; not-for-profit organizations; and all colleges, universities and health care providers, whether organized as not-for-profit or governmental entities.

c. All entities, except for those under the jurisdiction of the American Institue of CPAs.

d. Business-type organizations and not-for-profit organizations, including not-for-profit colleges, universities and health care providers.

3. To what extent do accounting standards promulgated by the Financial Accounting Standards Board (FASB) apply to state and local governmental entities?

Select one:

a. FASB standards never apply to governmental entities

b. FASB standards apply if so designated by the AICPA

c. All governmental entities have a choice between GASB and FASB standards

d. FASB standards apply if so designated by the GASB

4. Which of the following is the most authoritative source of accounting standards for not-for-profit colleges, universities, and health care providers?

Select one:

a. Current practices widely used by not-for-profit entities

b. FASB Statements and Interpretations

c. Consensus positions of the FASB Emerging Issues Task Force

d. AICPA Industry Audit Guides

5. To what extent do organizations that use fund accounting also report on the entity as a whole?

Select one:

a. Organizations that use fund accounting are not required to report on the entity as a whole

b. Organizations that use fund accounting are required to report on the entity as a whole

c. Organizations that choose to report on the entity as a whole are not permitted to use fund accounting for internal purposes

d. Organizations that use fund accounting have the option of reporting either on funds or on the organization as a whole

6. A not-for-profit organization performs all of the following activities except?

Select one:

a. Paying overtime to employees

b. Paying dividends to shareholders

c. Charging a fee for services provided

d. Purchasing long-lived (capital) assets

7. For which types of organizations is the Governmental Accounting Standards Board (GASB) responsible for establishing accounting and financial reporting standards?

Select one:

a. All governmental and not-for-profit organizations

b. All state and local governmental organizations, except for state and local governmental colleges, universities, health care providers, and utilities

c. All state and local governmental organizations, including government-sponsored colleges, universities, health care providers, and utilities

d. All state, local, and Federal organizations

8. Government and nonprofit accounting focuses on which of the following?

Select one:

a. Reporting to management

b. Demonstrating accountability

c. Protecting investors from fraud

d. Calculating profit or loss

9. Not-for-profit organizations obtain their revenues primarily from?

Select one:

a. Contributions from donors

b. Sales to customers

c. Taxes on real property

d. Taxes on personal property

scarletporpoise493

AvaAva

PetrilloPetrillo

recently opened her own law office on

MarchMarch

?1, which she operates as a corporation. The name of the newentity is

AvaAva

PetrilloPetrillo?,

Attorney.

PetrilloPetrillo

experienced the following events during the organizing phase ofthe new business and its first month of? operation,

MarchMarch

20182018.

Some of the events were personal and did not affect the lawpractice. Others were business transactions and should be accountedfor by the business.

Mar.Mar.???1		Sold personal investment in Amazon?stock, which she had owned for several? years, receiving $ 33 comma 000$33,000 cash.
2		Deposited the $ 33 comma 000$33,000 cash from the sale of the Amazon stock in her personal bankaccount.
3		Deposited $ 60 comma 000$60,000 cash in a new business bank account titled AvaAva PetrilloPetrillo?, Attorney. The business issued common stock to PetrilloPetrillo.
5		Paid $ 450$450 cash for ink cartridges for the printer.
7		Purchased computer for the law?office, agreeing to pay the? account, $ 7 comma 000$7,000?, within three months.
9		Received $ 3 comma 100$3,100 cash from customers for services rendered.
15		Received bill from TheLawyer for magazine? subscription, $ 200$200. ?(Use Miscellaneous Expense? account.)
23		Finished court hearings on behalfof a client and submitted a bill for legal? services, $ 12 comma 000$12,000?, on account.
28		Paid bill from The Lawyer.
30		Paid? utilities, $ 1 comma 300$1,300.
3131		Received $ 1 comma 000$1,000 cash from clients billed on MarchMarch 23.
3131		Cash dividends of $ 3 comma 000$3,000 were paid to stockholders.

Analyze the effects of thepreceding events on the accounting equation of

AvaAva

PetrilloPetrillo?,

Attorney.

Prepare the following financial? statements:

a. Income statement.

b. Statement of retained earnings.

c. Balance sheet.

d. Statement of cash flows.

Requirement 1. Analyze the effects of thepreceding events on the accounting equation of

AvaAva

PetrilloPetrillo?,

Attorney.Analyze the events? chronologically, one transaction ata time. Beginning with the transaction on the? 2nd, calculate thebalance in each account after analyzing the effect of thetransaction on the accounting equation. After calculating theending balance of each account on the

3131?st,

calculate total assets and total liabilities and equity.?(Complete only the necessary answer boxes for your transactionlines. If a transaction is personal and does not affect the?business, leave the transaction line blank. Carry down all balancesto the? "Bal." line, including zero balance? accounts, entering a?"0" for any zero balances. Enter a decrease in an account with aminus sign or parentheses. Abbreviations? used: A/P? = Accounts?Payable; A/R? = Accounts? Receivable; Com.? = Common; Contr. Cap.?= Contributed? Capital; Div.? = Dividends; Comp.? = Computer; Exp.?= Expense; Liab.? = Liabilities; Misc.? = Miscellaneous; Rev.? =Revenue; Sup.? = Supplies; Util.? = Utilities.)

ASSETS

LIAB.

EQUITY

Contr.

Cap.

Retained Earnings

Cash

A/R

Office

Comp.

A/P

Com.

Div.

Service

Util.

Misc.

Sup.

Stock

Rev.

Exp.

3/1

72,000

3/2

Bal.

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ACCT 225 Chapter Notes - Chapter 1-2: Debt Ratio, Revenue Recognition, Source Document

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