Common Acronyms used in Accounting Below, you will see acronyms for several organizations that are somehow related to accounting. Indicate what the acronym stands for and what the organization to which the acronym refers does. FASB Financial Accounting Standard Board IASB International Accounting Standard Board IRS Internal Revenue Service SEC Securities and exchange commission AICPA
Common Acronyms used in Accounting
- Below, you will see acronyms for several organizations that are somehow related to accounting. Indicate what the acronym stands for and what the organization to which the acronym refers does.
- FASB Financial Accounting Standard Board
- IASB International Accounting Standard Board
- IRS Internal Revenue Service
- SEC Securities and exchange commission
- AICPA
- For what do the following acronyms stand? Also, explain the concept behind the acronym.
- GAAP
Generally Accepted Accounting Principles.
It is set of rules and regulations followed by accounting firms in the United States
- IFRS
International Financial Reporting Standards
Set of rules and regulations generally followed by firms around the world.
Adjusting for Deferrals
- On October 1, 2019, a company prepays for 6 months of rent at $1,000 per month. Assume that the rental begins on October 1, 2018, that the company adjusts on a monthly basis, and a December 31, 2019 fiscal year end.
- Create a table that indicates the end-of-month balance in the prepaid rent account and the monthly expense from June 1, 2019 through June 1, 2020.
|
1-Oct |
31-Oct |
30-Nov |
31-Dec |
31-Jan |
28-Feb |
31-Mar |
|
|
Prepaid Rent |
$1000 |
|
|
|
|
|
|
|
Monthly Rent Expense |
|
|
|
|
|
|
|
- What will the balance of the Prepaid Rent account be at the end of August? How about the end of November?
August: __________________
November: _______________
- What will the Rent Expense be for the month ended December 31, 2019? What about the year ended December 31, 2019?
Month ended December 31, 2019: _______________
Year ended December 31, 2019: __________________
Failure to make an
- Describe the impact on a company’s financial statements if its accountant fails to make an adjustment for $1,000 in accrued revenue.
- Describe the impact on a company’s financial statements if its accountant fails to make an adjustment for $1,000 in accrued expenses.
- Describe the impact on a company’s financial statements if its accountant fails to adjust for $1,000 in revenue associated with previously recorded unearned revenue.
- Describe the impact on a company’s financial statements if its accountant fails to adjust for $1,000 in expenses associated with a previously recorded prepaid expense.
- Describe the impact on a company’s financial statements if its accountant if it fails to adjust for $1,000 in
depreciation expense.
Using the Adjusted
Use the following trial balance to answer the questions on the next page:
|
Donna’s Decorators |
|
Adjusted Trial Balance |
|
December 31, Current Year |
|
|
Debit |
Credit |
|
Cash |
$63,450 |
|
|
|
4,000 |
|
|
Interest Receivable |
1,200 |
|
|
Supplies |
800 |
|
|
Prepaid Insurance |
2,500 |
|
|
Prepaid Rent |
8,000 |
|
|
Equipment |
40,000 |
|
|
|
|
$12,000 |
|
Long-Term Investments |
20,000 |
|
|
Accounts Payable |
|
250 |
|
Unearned Revenue |
|
100 |
|
Short-Term Notes Payable |
|
30,000 |
|
Interest Payable |
|
3,000 |
|
Income Taxes Payable |
|
26,110 |
|
Common Stock |
|
10,000 |
|
|
|
20,000 |
|
Dividends |
10,000 |
|
|
Decorating Revenue |
|
120,400 |
|
Interest Revenue |
|
1,200 |
|
Wage Expense |
32,000 |
|
|
Utilities Expense |
1,000 |
|
|
Telephone Expense |
500 |
|
|
Supplies Expense |
1,000 |
|
|
Rent Expense |
4,000 |
|
|
Insurance Expense |
3,500 |
|
|
Depreciation Expense |
2,000 |
|
|
Interest Expense |
3,000 |
|
|
Income Tax Expense |
26,110 |
|
|
Totals |
$223,060 |
$223,060 |
- Fill out the following:
|
Net Income |
= |
Rev |
- |
Exp |
|
194,210 |
121,600 |
72,610 |
|
Equity |
= |
C/S |
+ |
Beg R/E |
+ |
Net Income |
- |
Dividend |
|
277,660 |
63450 |
10,000 |
194,210 |
10,000 |
|
Current Assets |
+ |
Non-current Assets |
= |
Current Liabilities |
+ |
Non-current Liabilities |
+ |
Equity |
|
|
|
|
|
|
- Show this period’s closing entry for revenues and expenses:
|
Revenue |
|
|
|
||
|
Decorating Revenue |
|
120,400 |
|
||
|
Interest Revenue |
|
1,200 |
|
||
|
|
|
121,600 |
|
||
|
|
|
|
|
||
|
Wage Expense |
32,000 |
|
|
||
|
Utilities expense |
1,000 |
|
|
||
|
Depreciation expense |
2,000 |
|
|
||
|
Supplies expense |
1,000 |
|
|
||
|
Rent expense |
4,000 |
|
|
|
|
|
Insurance expense |
3,500 |
|
|
|
|
|
Interest expense |
3,000 |
|
|
|
|
|
Income tax expense |
26,110 |
|
|
||
|
|
72,610 |
|
|
||
|
|
|
|
|
- Show this period’s closing entry for dividends:
|
Retained Earnings |
10,000 |
|
|
Dividends |
|
10,000 |
- Assuming adjustments are made annually, show the adjusting
journal entry for this year’s depreciation expense:
|
Depreciation expense |
2000 |
|
|
|
|
2000 |
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