➢ accounting has frequently been dubbed the language of business. In what respects would you agree through this description? How can you argue that this summary is deficient?

➢ define asset, liability, and also stockholders’ equity.

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➢ how do liabilities and also stockholders’ same differ? how are lock similar?

➢ just how do accounts payable and notes payable differ? exactly how are castle similar?

➢ define revenues. Exactly how are revenues measured?

➢ specify expenses. How are expenses measured?

➢ What is a balance sheet? ~ above what facet of a service does the balance sheet administer information?

➢ What is an earnings statement? on what element of a service does this statement provide information?

➢ What details does the statement of retained income provide?

➢ determine the three types of tasks shown in a statement of cash flows.

➢ What is a transaction? What use does the accountant do of transactions? Why?

➢ What is the accountancy equation? Why must it always balance?

➢ Give an instance from your personal life that illustrates your usage of bookkeeping information in getting to a decision.

➢ You have actually been elected to the governing plank of her church. In ~ the first meeting you attend, mention is do of building a brand-new church. What audit information would the board need in deciding even if it is or no to walk ahead?

➢ A firm purchased equipment for $ 2,000 cash. The merchant stated that the equipment was worth $ 2,400. At what amount must the tools be recorded?

➢ What is supposed by money measurement?

➢ the what significance is the exchange-price (or cost) concept? how is the cost to gain an heritage determined?

➢ What effect does the going-concern (continuity) ide have top top the amounts at which long-term assets are brought on the balance sheet?

➢ the what prestige is the periodicity (time periods) concept to the ready of gaue won statements?

➢ define a transaction the would:

Increase both an asset and also capital stock.Increase both one asset and also a liability.Increase one asset and decrease an additional asset.Decrease both a liability and an asset.Increase both one asset and retained earnings.Decrease both one asset and retained earnings.Increase a liability and also decrease kept earnings.Decrease both an asset and retained earnings.Identify the reasons of increases and decreases in stockholders’ equity

B) bookkeeping Exercises:

Exercise 1. Applying straightforward Accounting Equation

Royals Palm, Inc. Reports the adhering to assets and liabilities. Compute the totals the would appear in the corporation’s basic accounting equation (Assets = legal responsibility + Stockholders’ same (Capital Stock)).

Cash………………………….$55,000

Accounts Payable……………25,000

Office Supplies………………. 1, 500

Loan Payable…………………..7,000

Accounts Receivable………….10,000

Answer:

Assets= Liabilities+ Stockholders’ Equity

Exercise 2. Applying simple Accounting Equation

Dan and Den, Inc. Reports the adhering to assets and also liabilities. Compute the totals that would appear in the corporation’s simple accounting equation (Assets = liabilities + Stockholders’ same (Capital Stock)).

Cash………………………….$37,000

Accounts Payable……………15,000

Supplies……………………….1, 800

Loan Payable…………………..9,000

Inventory……………………….12,000

Answer:

Assets= Liabilities+ Stockholders’ Equity

Exercise 3. Complete absent amounts in fundamental accounting equation for several businesses:

Assets= Liabilities+ Stockholders’ Equity
578,000152,000
25,000180,500
127,00017,000
269,000 45,000
850,000 675,000
 250,000 657,450

Exercise 4. Perez company had the following transactions throughout January:

1. January 1 authorize $100,000 in share to owner in exchange for cash to start the business.

2. Jan 5 obtained $50,000 from the bank by signing a notes payable.

3. January 10 Purchase equipment by payment cash for $25,000.

3. January 15 paid January rent of $2,400 for the office an are (hint: because this is because that January, record as rental expense)

4. January 18 Performed services for customers and also received cash automatically for $8,000.

5. January 20 purchase $2,000 in offers on account.

Prepare a transaction evaluation for the January transactions. Remember come prove the accountancy equation in ~ the end.

Assets   =Liability + Equity + Revenue– Expense
TransactionCashSuppliesEquipmentAccounts PayableNotes PayableCommon StockService RevenueRent Expense
Jan 1 Issued share to owners
Jan 5 obtained money from bank
Jan 10 Purchased tools with cash
Jan 15 payment January rent
Jan 18 perform services
Jan 20 Purchased offers on account
Balance:        

Exercise 5. On December 31, Bryniuk’s Company, the accountancy records confirmed the following information:

Cash 49,500
Accounts Receivable 125,000
Supplies 1,500
Prepaid Insurance 12,000
Equipment 70,000
Building 420,000
Land 111,500
Accounts Payable 80,000
Notes Payable 170,000
Common Stock 410,000
Retained Earnings 65,000
Dividends 20,000
Service Revenue 174,000
Interest Revenue 1,000
Salaries Expense 52,000
Advertising Expense 17,000
Insurance Expense 5,000
Utilities Expense 13,750
Interest Expense 2,750

Prepare the revenue Statement for year finished December 31.

Bryniuk’s Company
Income Statement
For Year ended December 31
Revenues: .
 
 
complete Revenues
 
Expenses:
 
 
complete Expenses
 
Net Income

Exercise 6. Utilizing the info from exercise 5, prepare the explain of Retained revenue for December 31.

 
Bryniuk’s Company
Statement of preserved Earnings
For Year ended December 31
Beginning maintained Earnings $65,000
Add: network Income
Subtract: Dividends
 
Ending Retained earnings

Exercise 7. Using the info from exercises 5 and also 6, prepare the Balance Sheet because that December 31.

Bryniuk’s Company
Balance Sheet
December 31
Assets Liabilities and also Equity 
 
 
 Total Liabilities
 
 
 
 Total Equity
Total Assets Total Liabilities and also Equity

Problem 1: Prepare the financial statements of RodCast Company using the adhering to information:

Accounts Payable 43,100.00
Accounts Receivable 85,000.00
Cash 55,320.00
Common Stock 125,000.00
Dividends 28,000.00
Machinery 70,000.00
Rent Expense 24,000.00
Retained Earnings 70,000.00
Salaries Expense 65,000.00
Service Revenue 165,320.00
Supplies 2,350.00
Trucks 60,000.00
Utilities Expense 13,750.00

1. Classify each account by Account form (Asset, Liability, Equity, Revenue or Expense) and i beg your pardon financial declare (income statement, explain of maintained earnings, or balance sheet) it appears on.

Account Account type Financial statement

2. Prepare the revenue Statement, statement of preserved Earnings and Balance Sheet for the month finished October 31.

Comprehensive problems Example:

Larson’s audit Company has the complying with account balances: Cash, $5,000; account Receivable, $2,000; Prepaid rental $1,500; Supplies, $850; Equipment, $6,000; Trucks, $15,000; accounts Payable, $2,500; usual Stock, $20,000; Retained income $7,850. Company transactions during December space presented as follows:Company got cash indigenous clients because that services, $4,500Larson payment to creditor $500,Paid office rent because that the month of December, $750,Company billed client for bookkeeping services top top account, $5,200Supplies were purchased on account, $650,Company got cash from client billed previously, $6,000Larson obtained an invoice because that office tools repair services from Office Extra for December (the invoice will be paid following month), $850,Larson payment monthly salaries, $2,700,Utilities price were paid, $280,Miscellaneous expense were paid, $350,Dividends to be paid, $550.
Assets  = Liabilities + Stockholders’ same  + network Income  
Cash Accounts ReceivablePrepaid RentSupplies Equipment TrucksAccounts Payable Common stock + retained Earnings– DividendsRevenue – expenses Expense Type
Previous Balances$5,000$2,000$1,500$850$6,000$15,000$2,500$20,000$7,850  
14,5004,500
2-500-500
3-750750Rent expense
45,2005,200
5650650
66,000-6,000
7850850Repair expense
8-2,7002,700Salary expense
9-280280Utilities expense
10-350350Misc. Expense
11-550550  
Ending Balance: $11,120 $1,200 $750 $1,500 $6,000 $15,000 $3,500 $20,000 $7,850 $550 $9,700 $4,930  
 Larson CompanyIncome StatementMonth finished December 31, 2014
Fees earned$9,700
Expenses:
Rent Expense$750
Repair Expense850
Wages Expense2700
Utilities Expense280
Miscellaneous expense350
Total Expenses$4,930
Net earnings ($9,700 – $4,930)=$4,770
 Larson CompanyStatement of kept EarningsMonth ended December 31
Larson Inc., kept Earnings, December 31$ 7,850
Net revenue for the month$4,770
Less Dividends– 550
Increase in Stockholders’ Equity+ 4,220
Larson Inc., preserved Earnings, December 31$12,070
 
Larson Company
Balance Sheet
Month finished December 31
AssetsLiabilities
Cash$11,120Accounts Payable$3,500
Accounts Receivable 1,200
Prepaid Rent 750Stockholders’ Equity
Supplies 1,500Common Stock20,000
Equipment 6,000 Retained Earnings 12,070
Trucks 15,000
Total Assets$35,570 Total Liabilities and also Stockholders’ equity $35,570
 Comprehensive problem 1.Cast 77 Service company has the adhering to account balances: Cash, $6,000; account Receivable, $7,000; Prepaid Rent, 1,900; Prepaid Insurance, $1,200 Supplies, $950; Equipment, $7,000; Trucks, $10,000; accounts Payable, $2,700; common Stock $25,000; Retained earnings $6,350. Business transactions throughout December space presented as follows:Company received cash from clients because that services, $7,500Cast 77 payment to creditors $600,Paid office rent because that the month of December, $950,Company billed customer for accounting services on account, $8,200Supplies to be purchased ~ above account, $450,Company received cash from clients billed previously, $4,200Cast 77 received an invoice for services from Copy Plus because that December (the invoice will certainly be paid next month), $550,Cast 77 payment monthly salaries, $4,700,Utilities expense were paid, $380,Miscellaneous cost were paid, $250,Paid for monthly insurance, $200Dividends to be paid, $750.

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Required:Apply the straightforward accounting equation (create a spreadsheet, you re welcome see an extensive example) to finish a transaction evaluation for each transaction (hint: enter the balances provided first).Prepare revenue statement at the finish of December 31.Prepare statement of retained income equity at the finish of December 31.Prepare balance sheet at the finish of December 31.