accounting systems and process assignmt1

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Accounting Systems and Process

Assignments 1:

CQ

1-1: Four types of software program used to process information are:

1. Word processing Software: allows us to edit and create document. Eg Microsoft word, Notepad etc

2. Spreadsheet software: allows user to create document and perform calculation. E.g. Excel

3. Data based software: enables to store and retrieve data. E.g. Ms Acess, Oracel etc

4. Presentation graphics software: allows users to create user friendly presentation. E.g. MS PowerPoint.

1-2 match

i. Central Processing Unit: c. process data and controls computer operations.ii. Expansion and slots and boards: d. used to expand the computers capabilitiesiii. Memory. A. Storage for the documents and programs.iv. Ports. B. used to attach peripherals like printer.1-3:

1. Alt+Prt Sc Sys Rq2. Ctrl+V to word document


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Formula view:

1. Press ctrl+~2. Press Alt+Prt Sc Sys Rq3. Press Ctrl+V on word document.

1-4 1. CAD: Computer aided Design

2. RAM: Random access Memory

3. HDD: Hard Disk Drive

4. DOS: Disk operating Software

5. MS-DOS: Microsoft Disk Operating Software.

6. MPS: Micro Processor System

7. POS: Point Of Scale.

8. CAL: Computer Aided Learning

9. CBT: Computer Based Training

10. CD: Compact Disk

1-5


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Wizard: it is the process to

Screen Capture: aptures the currenty displayed data to the memory.

Thumb drive: small flash memory card.

Tablet: Tablet computer is a notebook

IOS: iOS is Apple Inc.'s mobile operating system

Adroid: Android is a Linux-based operating system for mobile devices.

Second life : it is a virtual life in computer and is associated with 3D- modeling. It was developed

by Linden Lab.

Quick check (QC)

1. C. Financial Accounting Standard Board (FASB). GAAP are formulated by FASAB which workswith the governmental agencies like the Securities and Exchange Commission (SEC) and with

groups like Public Companies Accounting Oversight Board (PCAOB), and private groups like

AICPA and IMA.

2. A. Corporation. In corporation there are generally many stockholders; those who own shares ofstock in the business. The life of the organization is indefinite and stockholders are not liable for

the business debt.

3. B. cost principle. The acquired assets an services should be recorded at their actual cost. The costof the entity should record the historical cost till the life of the very entity. Also, if equipment is

bought at $2000 which cost $1600 the cost must be recorded as $2000.

4. $105 million; because assets- owners equity= total liability ($345-$240=$105).5.b. increase both assets and owners equity by $48,000.

Assets=Liabilities + Owners Equity

Accounts receivable

Revenue

6.d. all the above

7. b. customers. Financial information is needed by all to know the status of the organization.

8. a..Net income of $39,000(revenue-expense)9. a.Financial position on a specific date. The balanesheet helps us to determine the status

of the organization

10. c. Limited liability of stockholders.

S1-1:


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Revenue: The amount earned by delivering goods and services to the customer is defined as revenue.

Revenue for different firm has different term like for service industry, services rendered are revenue and

for goods industry; the amount received after goods are sold is revenue.

Expense: Expenses are those entities which decrease the equity by using asset or by increasing liability.

Generally expenses are incurred in order to produce revenue. For example, two workers are employed by

the organization in order to sell goods then salary paid to them is expense and these workers are indulging

to produce revenue.

Exercises:

Using the accounting equation to analyze transactions:

E1-19

a) Increase Asset(Cash)Increase Owners equity (Capital)

b) Increase Asset(Cash)Increase liability (unearned revenue)

c) Increase Asset(Office Furniture)Increase Liability (Account Payable)

d) Increase Asset(Cash)Decrease Asset (Account Receivables)

e) Decrease Asset(Cash)Decrease Liability (Account Payable)

f) Decrease Asset( land)Increase Asset (Cash)

g) Increase Asset(Cash)Increase Owners Equity (Capital)h) Decrease Asset(Cash)Decrease liability (rent expense)

i) Increase Asset(Supplies)Decrease Asset (asset)

E1-19:

Examples for effects in accounting equation:


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a. Increase one asset and decrease another asset:Purchasing inventory from cash.

b. Decrease in asset and decrease in owners eqityWithdrawls from firms bank account

c. Decrease in asset and decrease in liability:Paying salary by cash which was payable for one month.

d. Increase in asset and increase in owners equity.Depositing cash in the banks name.

e. Increase in asset and increase in liability;Receiving cash to provide service for next month.

P1-30A:

P1-36A: Preparing the income statement

1. Income statement

Income statementStudio PhotograpyDecember 31, 2012

RevenueService revenue

ExpensesAdvertising expenseSalary expenseInsurance expenseTotal expense

$3,000$25,000$8,000$36,000

$80,000

Net Income $44,000


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Owners equityStudio Photography

Anal Opening CapitalOwners investmentNet IncomeAnal Withdrawing

$16,00029,00044,000

13,000

Total equity $76,000

Studio PhotographyBalance sheet31 Dec 2012

Assets

Current assetsCashReceivablesEquipment

Total assets

$37,0008,000

50,000

$95,000

Liabilities

LiabilitiesAccounts payableNotes payable

Total liabilities

Owners equity

Total Liabilities andOwners equity

7,00012,000

19,000

76,000

$95,000


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Chapter 2

Quick Check:

1. b. journalize transactions, prepare the trail balance, post to the accounts2. d. debits3. b. 132. Because Asset- Liabilities = owners equity and here assets are receivables,

furniture and cash (total=322) minus liabilities which are note payable and account payable

(total=190) so, owners equity is $132,000.

4. b. Supplies 2,500Accounts payable 2,500

Because supplies are debit as it is asset and account payable is liability so, its credit.

5. Account payable 2,500Cash 2,500

Because to clear account payable account it must be debited and cash is here outflow so, it

is credited.

6. Supplies Account Receivables2,500 2,500

Because left side of T-account is debit and Right side is Credit.

7. b. a journal.8. B. too much for liability. Because account payable which is on the liability side, when

credited increases more, moreover, the account receivables must be credited.

9. c. 131,000 because Owners equity= opening balance (OE)+ net profit(revenue expense).10.d. Expense 2,500

Cash 2,500


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S2-5. Journalizing transactions:

Date Accounts and Explanations Debit Credit

1. CashOwners equity

(to record Cash)

$29,000$29,000

2. SuppliesAccount Payable

(to record supplies on account)

$14,000$14,000

3. Office ExpensesCash

(to record office expenses)

$2,600$2,600

4. Account ReceivablesRevenue

(to record revenue earned)

$8,000$8,000

E2-14:

Chapter 3

Quick Check

1. b. Accrual accounting is superior because it provides more information.The accrual accounting records the effect of each transaction as it occurs which is when

revenue is recorded when it is earned and expense is recorded when incurred.

2. b. record revenue only after you have earned.3. b. recording transactions as they occur during the period.4. c. Prepaid and accruals.5. a. Salary expense 2,500

Salary payable 2,500

6. a. Service Revenue of $3607. b. Prepaid expense8. c. a liability9. b. amounts ready for financial statements10.d. Both a and b are correct.

Short Exercises:

S3-6: Journalizing adjusting entries


1. April1 Prepaid Rent $4,800


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Cash(to record Prepaid rent)

$4,800

2. April 30 Rent ExpensePrepaid Rent

(to record supplies on account)

$800$800

T-account:

Prepaid Rent Cash Rent Expense

(a) $4,800 (b) $800 (a) $4,800 (b) $800

Bal $4,000 Bal $4,800 Bal $800

Exercises:

E3-17 Categorizing and journalizing adjusting entries:

1.

2.


a. Dec31

Unearned revenueRent revenue

(to record the earned revenue)

$1,100$1,100

b. Dec31

Salary ExpenseSalary expense payable

(to record accrued expense)

$6,800$6,800

c. Dec31

Supplies ExpensesSupplies

(to record the accrued expenses)

$1,800$1,800

d. Dec31

Depreciation ExpenseAccumulated depreciation

(to record accrued expense)

$300$300

e. Dec31

Interest expensePrepaid insurance

( to record accrued insurance)

$250$250


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E3-26 Preparing the income statement

2. Income statement

3. Were 2012 operations successful?Yes the operations were successful.

P3-45B

1. Journalize the adjusting entries.Date Accounts and Explanations Debit Credit

a. Insurance expensePrepaid insurance(to record accrued expense )

$900 $900

b. Supplies expenseSupplies

(to record supplies )

$500$500

c. Depreciation ExpensesAccumulated depreciation

(to record accrued expenses)

$1,000$1,000

d. Salary expenseSalary expense payable

(to record accrued salary expense)

$300$300

e. Unearned Service revenueService revenue

(to record acquired revenue)

$1500$1500

Income statement

Reva StewartDecember 31, 2012

RevenueService revenue

ExpensesSalary expenseSupplies expenseDepreciation expense- eqipDepreciation expense-bidgTotal expense

$29100$600$1900$5000$36,600

$106,500

Net Income $69,900


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Ledger Account:

Insurance Expense Prepaid Insurance Supplies expense Supplies

900 900 500 500

Depreciation expense Accumulated depreciation salary expense

1000 1000 300

Salary expense payable unearned revenue service revenue

300 1500 1500


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CONCORD BED AND BEEAKFAST COMPANYTrail Balance

December 31, 2012

Account Title Unadjusted TrailBalance

Adjustments Profit & Loss Balance Sheet

Cash 12000 12000

Account Receivable 14400 14400

prepaid insurance 2800 900 1900

Supplies 1400 500 900

Building 435000 435000Accumulated depreciation 310500 1000 311500

Account payable 1930 1930

Salary payable 300 300

Unearned service revenue 3000 1500 1500

Wanger, capital 141060 141060

Wanger, drawing 2940 2940

Service revenue 15700 1500 17200

salary expense 2800 300 3100

insurance expense 900 900

depreciation expense 1000 1000

advertising expense 850 850supplies expense 500 500

Total 472190 472190 4200 4200 6350 17200 467140 456290

Net Income 10850

467140 467140


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Chapter 4:

Quick Check:

1. a. Financial statement, because it allows us to extract many ratios e.g. inventory turnover,liquidity ratio, quick ratio, credit ratio, asset liability ratio and many more which in fact is a

valuable information about the organization performance level and helps whether to expand the

business or not.

2. b. Trail balance: according to the accounting cycle the data for the trail balance comes from theledger account and which is unadjusted.

3. d. cash, Salary payable, and Salary expense4. a. total debits exceeds total credits, because income statement is all related with revenue and

expense and the end result in income statement is net profit which is equal to revenue less

expenses so, as we know revenue is credit and expense is debit.

5. c. Supplies Expenses 4,000Supplies 4,000

Because to supplies used is 4,000 so to cancel supplies of 4,000 it must be credited and to

increase supplies expense it must be debited.

6. d. Accumulated depreciation; because closing entries transfers revenue, expose, and withdrawalbalance to the capital account.

7. a. Zero out the revenues, expenses, and drawing; because the closing account consists ofjournalizing and posting the closing entries to set the balances of the revenue, expense, and

withdrawal account to zero for the next period.

8. b. Salary payable XXXXIncome summary XXXX

Because closing entry includes revenue and expenses and drawing which is later posted

to capital account through income summary whereas salary payable is balance sheet

entity and which is current liability.

9. Liquidity; balance sheet is arranged in such a way that the entity which appear ahead are moreliquid then the forthcoming, for example current assets are more liquid then long-term asset. Cash

is more liquid than inventory (arranged in liquidity preference even within each specific

categories of entity, e.g. current asset, long term asset). Here both cash and inventory are current

assets.


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10.a. 2.71Current ratio=( total current assets)/(total current liabilities)

= (600+900+400=1900)/ (500+200)

= (1900)/ (700)

=2.71

S4-9: Classifying assets and liabilities as current or long-term:

A. Identifying Assets:Current assets

a. Cashb. Receivablesc. Prepaid expense

Long term assets

a. Buildingsb. Equipmentc. Contra asset account: Accumulated Depreciation

B. Identifying Liabilities:Current Liabilities

a. Account Payableb. Accrued liabilities(such as salary payable)


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Jet Fast Printing

Assets

Current assetsCashReceivablesPrepaid expense

Total current assets

Long term Assets

BuildingEquipmentLess:Accumulated depreciation

Total long-term Assets

Total Assets

$400700300

42001100

3000

$1400

Liabilities

Current LiabilitiesAccounts payableAccrued Liabilities

Total liabilities

600400

1000

50006400


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P4-25A: Adjusting Journal entries:

Fugazy Investment


a. 31 Dec 2012 Unearned revenue

Service revenue(to record incurred revenue )

$500

$500

b. 31 Dec 2012 Supplies expenseSupplies

(to record supplies usages )

$1000$1000

c. 31 Dec 2012 Depreciation ExpensesAccumulated depreciation

(to record accrued expenses)

$6,000$6,000

d. 31 Dec 2012 Salary expenseSalary payable


$1000$1000

e. 31 Dec

2012

Unearned Service revenue

Service revenue(to record acquired revenue)

$4000

$4000

P4-32B: Adjusting Journal entries:

LEOPARD ANVILS


a. 31 Jan 2012 Unearned service revenueService revenue

(to record incurred revenue )

$4500$4500

b. 31 Dec 2012 Rent expensePrepaid rent

(to record supplies usages )

$1,800$1,800

c. 31 Dec 2012 Supplies expenseSupplies

( to record supplies expense)

$1,100$1,100

d. 31 Dec 2012 Depreciation ExpensesAccumulated depreciation

(to record depreciation expenses)

$400$400

e. 31 Dec2012

Salary expenseSalary payable


$500$500


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BibliographyCharles Davis Enterprises, C. H. (n.d.). http://www.web-friend.com/index.html. Retrieved 04 03, 2012,

from web-friend.com: http://www.web-friend.com/help/lingo/pcacnm.html

University, J. S. (n.d.). CS201-Lecture7. Retrieved 4 3, 2012, from http://www.jsu.edu/mcis/:

http://mcis.jsu.edu/faculty/malam/CS201-Lecture7.htm

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