Exam 2: The Basics of Record Keeping and Financial Statement Preparation: Balance Sheet

Several actions that an organization may take are not recognized or entered in the accounting records.While not entered into the formal accounting system, several such actions are exceedingly important to the organization. Required: Comment on the current and future implications that the hiring of a new president may have on the organization's accounting records.

What (other than a transactions spreadsheet ) serves the function of accumulating information about the effect of business transactions on each balance sheet and income statement account?

_____ accounts provide disaggregated information concerning the net amount of an asset, liability, or shareholders' equity item. Note that the use of such accounts does not affect the total of assets, liabilities, shareholders' equity, revenues, or expenses, but only the balances in various accounts that comprise the totals for these items.

Temporary accounts are for recording

Which of the following is/are not true regarding a merchandising firm?

A balance sheet account with a credit balance requires a closing entry that debits that account, because a debit closing entry will result in a zero ending balance in the account.

A balance sheet account with a debit balance requires a closing entry that credits that account, because a credit closing entry will result in a zero ending balance in the account.

The balance sheet provides all the information an analyst wants or needs about a firm's resources and the claims on those resources.

Explain the terms debit and credit. In your discussion, also present the debit and credit rules that are critical for maintaining T-accounts, as well as the equality of the balance sheet.

T-accounts

A T-account is a device or convention for organizing and accumulating the accounting entries of transactions that affect an individual account, such as cash, accounts receivable, bonds payable, or additional paid-in capital.

What is the relationship between a T-account and a journal entry?

Solve for the unknown item for each of the following independent situations. CASE A CASE B CASE C Total assets A 400 600 Contributed capital 100 150 C Total revenues 400 300 400 Total liabilities 600 B 250 Beginning retained earnings (50) 100 100 Total expenses 250 350 200 Dividends 0 50 0

On December 31, 2013, the Merchandise Inventories account of the Japanese electronics firm Flower Limited (Flower) had a balance of ¥408,700 million, based on Flower's financial reports for fiscal 2013.Assume that during 2014, Flower purchased merchandise inventories on account for ¥1,456,400 million.On December 31, 2014, it finds that merchandise inventory on hand is ¥412,400 million.Select the correct journal entries to account for all changes in the Inventories during 2014.(Flower applies Japanese accounting standards, and reports its results in millions of yen (¥).In answering this question, assume that Flower uses either U.S.GAAP or IFRS; for purposes of this problem, this choice will not matter.)

What is the purpose of using contra accounts? What is the alternative to using them?

The equation that describes the relationship between the balance sheet and the income statement through the Retained Earnings account is as follows: Retained Earnings (beginning) + Net Income - Dividends = Retained Earnings (ending)

The balance sheet equation provides the analytical framework to understand the effects of transactions and events on the financial statements.

The accounting system uses a device called an account.An account

Culinary Delites, a European food retailer engaged in the following three transactions during 2013: (1) purchased and received inventory costing €978 million on account from various suppliers; (2) returned inventory costing €57 million because of damage that occurred during shipment; (3) paid the various suppliers the total amount due.Indicate the effects of each of these three transactions on the balance sheet equation.Culinary Delites applies IFRS and reports its results in millions of euros (€). Shareholders'