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a.
Chart of Accounts: The purpose of chart of accounts is to identify the particular account with the number assigned to it, to help the business better organize number of accounts used. Any account can be recognized through the short number allocated to it instead of large name of the account. This number is unique to an account to avoid any confusion.
Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
T-account:
An account is referred to as a T-account, because the alignment of the components of the account resembles the capital letter ‘T’. An account consists of the three main components which are as follows:
- (a) The title of the account
- (b) The left or debit side
- (c) The right or credit side
To prepare: A chart of accounts that would be appropriate for Service EC.
b.
To prepare: An income statement for the month of June using T-accounts in order to assess the profitability of Service EC.
c.
To compute: The amount of cash on hand on June 30 based on Person CN’s records of receipts and payments.
d.
To discuss: The possible causes of the difference between the amount of cash computed in (c) and the actual amount of cash on hand.
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Chapter 2 Solutions
Custom Bundle: Accounting, Loose-leaf Version, 26th + Working Papers, Chapters 1-17, 26th Edition
- Question 3Footfall Manufacturing Ltd. reports the following financial information at the end of the current year: net sale $100 000 debtor's turnover ration (based on net sales) 2 inventory turnover ration 1.25 fixed assets turnover ratio 0.8 debt to assets ratio 0.6 net profit margin 5% gross profit margin 25% return on investment 2% Use the given information to fill out the templates for income statement and balance sheet given below: Income Statement of Footfall Manufacturing Ltd. for the year ending December 31, 20XX(in $) sales 100,000 cost of goods sold gross profit other expenses earnings before tax tax @50% earnings after tax Balance Sheet of Footfall Manufacturing Ltd. as at December 31, 20XX (in $) liabilities amount assets amount equity net fixed assets long term debt 50, 000 inventory short term debt debtors…arrow_forwardfinal answer.arrow_forwardHow many weeks of supply does summit logistics Inc. Hold ? Accounting questionarrow_forward
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