Answered: Thomas Company has decided to purchase…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Thomas Company has decided to purchase a company vehicle. The accountant was given all of purchase details. Which should be used to record the vehicle in the accounting records?

The amount of the loan with the bank.

The average selling price of similar vehicles in the area.

The manufacturer’s suggested retail price (MSRP).

The price negotiated with the dealer.

A business will construct its financial statements in a particular order because they are interrelated. This means that items formulated in an earlier statement feed into the subsequent statements, and changes to items on one financial statement can have compounding effects on the overall financial position of a company.

Which of the following is one reason the statement of owner's equity is prepared after the income statement?

Which of the following is one reason the statement of owner's equity is prepared before the balance sheet?

On December 1 of the current year, Rob Elliot invested $35,000 of his cash to form a proprietorship, GGE Enterprises. After all transactions have been entered into the accounting equation, the following are the ending balances for selected items on December 31. On that date, the financial statements were prepared. The statement of owner’s equity for GGE Enterprises reported Rob Elliot’s owner’s equity as of December 31 at $38,445. The balance sheet reported total liabilities and owner’s equity of $56,900.

	Accounts		Accounts	Rob Elliot,	Rob Elliot,	Fees	Rent	Supplies	Utilities	Wages	Miscellaneous
Cash	Receivable	Land	Payable	Capital	Drawing	Earned	Expense	Expense	Expense	Expense	Expense
?	8,850	16,500	?	?	$6,000.00	$27,250.00	$6,400.00	?	$4,575.00	$1,235.00	$370.00

Review the following questions. Place an ‘X’ in the box to indicate which financial statement(s) report the desired information. Enter the amount reported on the financial statement.

	Balance	Income	Statement of
Sheet	Statement	Owner’s Equity	Amount
What are the total assets owned by GGE Enterprises?
How much cash is being held by GGE Enterprises?
By what amount did Rob Elliot’s equity increase or decrease during the period?
What is the amount of profit or loss during December?
What were the total expenses for December?
How much expense was reported for supplies?
How much does GGE Enterprises owe to its creditors?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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