asses 3 3061

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Western Governors University *

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3061

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Accounting

Date

Apr 3, 2024

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docx

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Respond to the following seven questions using grammatically correct language. Save the document and submit it in the courseroom. 1. How are revenues and expenses reported on the income statement under the cash basis of accounting and the accrual basis of accounting? Cash basis accounting reports when the cash is paid or received. Accural basis accounting reports when it is earned and when the expenses occur 2. Which events during an accounting period trigger the recording of normal journal entries and which event triggers the making of adjusting entries? Please explain why adjusting entries are necessary at the end of an accounting period. Normal journal entries are recorded when processing business financial transactions during the accounting period. Adjustment entries are recorded when there is any correction that needs to be made before the official statement is prepared during the accounting period. 3. Give an example of an adjusting journal entry for each of the following transactions.  Equal growth of an expense and a liability.  Earning of revenue that was previously recorded as unearned revenue.  Equal growth of an asset and revenue.  Increase in an expense and decrease in an asset. Equal growth of an expense and a liability.-Debit the expense and credit the liability. Earning of revenue that was previously recorded as unearned revenue- The unearned revenue entry will decrease, while the earned revenue entry increases. Equal growth of an asset and revenue- debit the asset and credit the revenue. Increase in an expense and decrease in an asset- Debit the expense and credit the asset. 4. The balance in the equipment account is $1,375,000, and the balance in the accumulated depreciation equipment account is $725,000. What is the book value of the equipment and does that amount mean that the equipment has a loss in real value of $725,000? Explain your response. The balance in the equipment account is $1,375,000 and the balance in the accumulated depreciation equipment account is $725,000. The book value of the equipment would be $650,000. The accumulated depreciation does not mean that the equipment has la loss in real value. The original cost of the equipment and the accumulated depreciation is an estimate on how long the life span is and with this example, the equipment has used 53% of its life span.

5. After the Adjusted Trial Balance columns of a work sheet have been totaled, which account balances are extended to the Income Statement columns, the Statement of Retained Earnings columns, and the Balance Sheet columns? Revenue and expense accounts would extend to the Income Statement columns. The dividends and equity would extend to the statement of retained earnings. Dividends asset and liabilities would extend to the balance sheet columns 6. Current assets and current liabilities for a company are:  Current assets: 2013—$262,500; 2014—$310,500.  Current liabilities: 2013—$150,000; 2014—$172,500. Determine the current ratio for 2013 and 2014. Does the change in the current ratio from 2013 to 2014 indicate a favorable or unfavorable trend? 2013 the ratio is 1.75:1. 2014 the ratio is 1.8:1. It appears to be a favorable trend since we see an increase from 2013 to 2014 7. Rearrange the following steps in the accounting cycle in proper order: Financial statements are prepared. An adjusted trial balance is prepared. Adjustment data are assembled and analyzed. Adjusting entries are journalized. Closing entries are journalized and posted to the ledger. An unadjusted trial balance is prepared. Transactions are posted to the ledger. Transactions are analyzed and recorded in the general journal. An optional end-of-period work sheet is prepared. A post-closing trial balance is prepared. 1. Transactions are analyzed and recorded in the general journal.

2. Transactions are posted to the ledger. 3. An adjusted trial balance is prepared. 4. An optional end-of-period worksheet is prepared. 5. Financial statements are prepared. 6. Adjustment data are assembled and analyzed. 7. Adjusting entries are journalized. 8. An adjusted trial balance is prepared. 9. A post-closing trial balance is prepared.

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10. Closing entries are journalized and posted to the ledger 2. Transactions are posted to the ledger. 3. An adjusted trial balance is prepared. 4. An optional end-of-period worksheet is prepared. 5. Financial statements are prepared. 6. Adjustment data are assembled and analyzed. 7. Adjusting entries are journalized. 8. An adjusted trial balance is prepared. 9. A post-closing trial balance is prepared. 10. Closing entries are journalized and posted to the ledger