FinancialAccounting-OP_YioY6nY-39

Prévia do material em texto

12. 3.5 What types of accounts will increase with a credit?
13. 3.5 What is a journal?
14. 3.5 Why is a journal referred to as the “book of original entry”?
15. 3.5 What does the term recognize mean?
16. 3.5 What are the rules you should follow when recording journal entries?
17. 3.5 What is the general ledger?
18. 3.5 Explain the steps in posting.
19. 3.5 What is a T-account? When would we use T-accounts?
20. 3.5 Explain normal balances. Give three examples of accounts that will normally have a debit balance
and three accounts that will normally have a credit balance.
21. 3.5 What is a prepaid account? What type of account is it?
22. 3.5 What is an unearned account? What type of account is it?
23. 3.5 Explain what a T-account is and what purpose it serves.
24. 3.5 Can a credit entry be described as a generally positive or negative transaction? Explain.
25. 3.5 What types of accounts are increased with a debit?
26. 3.5 What types of accounts are increased with a credit?
27. 3.5 What does an account’s “normal balance” indicate?
28. 3.5 Does the order in which financial statements are prepared matter?
29. 3.5 Answer the following questions about the trial balance: What is the purpose of it? What is the
primary usefulness of it?
Chapter 3 Analyzing and Recording Transactions 181
Exercise Set A
EA1. 3.1 Match the correct term with its definition.
A. cost principle i. if uncertainty in a potential financial estimate, a company should err on the side of
caution and report the most conservative amount
B. full disclosure
principle
ii. also known as the historical cost principle, states that everything the company owns
or controls (assets) must be recorded at their value at the date of acquisition
C. separate
entity concept
iii. (also referred to as the matching principle) matches expenses with associated
revenues in the period in which the revenues were generated
D. monetary
measurement
concept
iv. business must report any business activities that could affect what is reported on
the financial statements
E. conservatism v. system of using a monetary unit by which to value the transaction, such as the US
dollar
F. revenue
recognition
principle
vi. period of time in which you performed the service or gave the customer the
product is the period in which revenue is recognized
G. expense
recognition
principle
vii. business may only report activities on financial statements that are specifically
related to company operations, not those activities that affect the owner personally
EA2. 3.2 Consider the following accounts, and determine if the account is an asset (A), a liability (L), or
equity (E).
A. Accounts Payable
B. Cash
C. Dividends
D. Notes Payable
EA3. 3.2 Provide the missing amounts of the accounting equation for each of the following companies.
182 Chapter 3 Analyzing and Recording Transactions
This OpenStax book is available for free at http://cnx.org/content/col25448/1.4
EA4. 3.2 Identify the financial statement on which each of the following accounts would appear: the income
statement (IS), the retained earnings statement (RE), or the Balance Sheet (BS).
A. Insurance Expense
B. Accounts Receivable
C. Office Supplies
D. Sales Revenue
E. Common Stock
F. Notes Payable
EA5. 3.2 Cromwell Company has the following trial balance account balances, given in no certain order, as
of December 31, 2018. Using the information provided, prepare Cromwell’s annual financial statements (omit
the Statement of Cash Flows).
EA6. 3.3 From the following list, identify which items are considered original sources:
A. prepaid insurance
B. bank statement
C. sales ticket
D. general journal
E. trial balance
F. balance sheet
G. telephone bill
H. invoice from supplier
I. company sales account
J. income statement
Chapter 3 Analyzing and Recording Transactions 183
EA7. 3.4 Indicate what impact the following transactions would have on the accounting equation, Assets =
Liabilities + Equity.
Impact 1 Impact 2
A. Received cash from issuance of common stock
B. Sold goods to customers on account
C. Collected cash from customer sales made in previous month
D. Paid cash to vendors for supplies delivered last month
E. Purchased inventory on account
Table 3.4
EA8. 3.4 For the following accounts please indicate whether the normal balance is a debit or a credit.
A. Sales
B. Dividends
C. Office Supplies
D. Retained Earnings
E. Accounts Receivable
F. Prepaid Rent
G. Prepaid Insurance
H. Wages Payable
I. Building
J. Wages Expense
EA9. 3.4 Indicate what impact the following transactions would have on the accounting equation, Assets =
Liabilities + Equity.
Impact 1 Impact 2
A. Paid monthly note payment to bank
B. Sold inventory on account
C. Bought supplies, to be paid for next month
D. Received cash from sales this month
E. Paid for inventory purchased on account last month
Table 3.5
184 Chapter 3 Analyzing and Recording Transactions
This OpenStax book is available for free at http://cnx.org/content/col25448/1.4
EA10. 3.4 Identify the normal balance for each of the following accounts. Choose Dr for Debit; Cr for Credit.
Normal balance
A. Utilities Expense
B. Cash
C. Equipment
D. Rent Revenue
E. Preferred Stock
F. Interest Payable
Table 3.6
EA11. 3.4 Identify whether each of the following transactions would be recorded with a debit (Dr) or credit
(Cr) entry.
Debit or credit?
A. Cash increase
B. Supplies decrease
C. Accounts Payable increase
D. Common Stock decrease
E. Interest Payable decrease
F. Notes Payable decrease
Table 3.7
Chapter 3 Analyzing and Recording Transactions 185
	Chapter 3. Analyzing and Recording Transactions
	Exercise Set A