12th Edition

ISBN: 9780134487212

Author: MILLER-NOBLES

Publisher: PEARSON CO

Concept explainers

The Effect Of Prepaid Taxes On Assets And Liabilities

Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can resu…

Final Accounts

Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.

Ledger Posting

A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the a…

Trial Balance and Final Accounts

In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately…

Adjustment Entries

At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial repor…

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Textbook Question

Chapter 1, Problem 1.1DC

Decision Case 1-1 Let’s examine a case using Greg's Tunes and Sal's Silly Songs. It is now the end of the first year of operations, and both owners want to know how well each business came out at the end of the year. Neither business kept complete accounting records, and neither owner made any withdrawals. The businesses throw together the data shown below at year-end:

Sal's Silly Songs:
Total Assets	$ 23,000
Owner contribution	8,000
Total Revenues	35,000
Total Expenses	22,000
Greg's Tunes:
Total Liabilities	$ 10,000
Owner contribution	6,000
Total Expenses	44,000
Net Income	9,000

To gain information for evaluating the businesses, the owners ask you several questions. For each answer, you must show your work to convince the owners that you know what you are talking about.
Requirements

Which business has more assets?
Which business owes more to creditors?
Which business has more owner's equity at the end of the year?
Which business brought in more revenue?
Which business is more profitable?
Which of the foregoing questions do you think is most important for evaluating these two businesses? Why?
Which business looks better from a financial standpoint?

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