16th Edition

ISBN: 9781308821672

Author: Libby

Publisher: MCG/CREATE

Concept explainers

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business…

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Textbook Question

Chapter 5, Problem 5.1P

Matching Transactions with Concepts

Following are the concepts of accounting covered in Chapters 2 through 5. Match each transaction or definition with its related concept by entering the appropriate letter in the space provided. Use one letter for each blank.

Concepts		Transactions/Definitions
_ (1) Users of financial statements		A. Recorded a S2.000 sale of merchandise on credit. B. Counted (inventoried) the unsold items at the end of the period and valued them in dollars. C. Acquired a vehicle for use in operating the business. D. Reported the amount of depreciation expense because it likely will affect statement users' decision making. E. The investors, creditors, and others interested in the business. F. Used special accounting approaches because of the uniqueness of the industry. G. Sold and issued bonds payable of $3 million. H. Used services from outsiders: paid cash for some and put the remainder on credit. I. Engaged an outside independent CPA to audit the financial statements. J. Sold an asset at a loss that was a peripheral or incidental transaction. K. Established an accounting policy that sales revenue shall be recognized only when ownership to the goods sold passes to the customer. L. To design and prepare the financial statements to assist the users in making decisions. M. Established a policy not to include in the financial statements the personal financial affairs of the ow ners of the business. N. Sold merchandise and services for cash and on credit during the year: then determined the cost of those goods sold and the cost of rendering those services. O. The user value of a special financial report exceeds the cost of preparing it. P. Valued an asset, such as inventory, at less than its purchase cost because the replacement cost is less. Q. Dated the income statement ‘For the Year Ended December 31.2017.” R. Paid a contractor for an addition to the building with S15.000 cash and $20,000 market value of the stock of the company (S35.000 was deemed to he the cash-equivalent price). S. Acquired an asset (a pencil sharpener that will have a useful life of five years) and recorded it as an expense when purchased for SI .99. T. Disclosed in the financial statements all relevant financial information about the business: necessitated the use of notes to the financial statements. U. Sold an asset at a gain that was a peripheral or incidental transaction. V. Assets of S600.000 - Liabilities of $400,000 = ? W. Accounting and reporting assume a “going concern.’’
_ (2) Objective of financial statements

Qualitative Characteristics _ (3) Relevance
_ (4) Reliability

Assumptions
_ (5) Separate entity
_ (6) Continuity
_ (7) Unit of measure
_ (8) Time period

Elements of Financial Statements
_ (9) Revenues
_(10) Expenses
_(11) Gains
_(12) Losses
_(13) Assets
_(14) Liabilities
_(15) Stockholders’ equity

Principles
_(16) Cost
_(17) Revenue
_(18) Matching
_(19) Full disclosure

Constraints of Accounting
_(20) Materiality threshold
_(21) Cost-effectiveness
_(22) Conservatism constraint
_(23) Special industry practices

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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Chapter 5, Problem 5.19E

Chapter 5, Problem 5.2P

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A. Classify the transactions in the box to the appropriate journal where it will be recorded. (Please refer to the picture.)

SUBJECT: Financial Accounting and Reporting Instruction: Choose the Debit and Credit Accounts of the following transactions. TRANSACTION: Purchased supplies on account1. Debit *a. Cash In Bankb. Accounts Receivablec. Unused Laundy Suppliesd. Prepaid Insurancee. Equipmentf. Accounts Payableg. Unearned Incomeh. Amora, Drawingi. Amora, Capitalj. Service Incomek. Salaries ExpenseL.Taxes and Licensesm.Transportation 2. Credit *a. Cash In Bankb. Accounts Receivablec. Unused Laundy Suppliesd. Prepaid Insurancee. Equipmentf. Accounts Payableg. Unearned Incomeh. Amora, Drawingi. Amora, Capitalj. Service Incomek. Salaries ExpenseL.Taxes and Licensesm.Transportation TRANSACTION: Paid travelling expenses to pay business permit3. Debit *a. Cash In Bankb. Accounts Receivablec. Unused Laundy Suppliesd. Prepaid Insurancee. Equipmentf. Accounts Payableg. Unearned Incomeh. Amora, Drawingi. Amora, Capitalj. Service Incomek. Salaries ExpenseL.Taxes and Licensesm.Transportation 4. Credit *a. Cash In Bankb.…

The Purchases account in a general ledger: O a. js an asset account. O b. appears on the income statement. O c. appears on the balance sheet. O d. has a normal credit balance.

Chapter 5 Solutions

FINANCIAL ACCOUNTING 9TH

Ch. 5 - Prob. 1Q Ch. 5 - Prob. 2Q Ch. 5 - Prob. 3Q Ch. 5 - Explain what a material amount is.Ch. 5 - What basis of accounting (cash or accrual) does...Ch. 5 - Prob. 6Q Ch. 5 - Prob. 7Q Ch. 5 - Prob. 8Q Ch. 5 - Prob. 9Q Ch. 5 - For property, plant, and equipment, as reported on...

Ch. 5 - Briefly explain the major classifications of...Ch. 5 - Prob. 12Q Ch. 5 - Prob. 13Q Ch. 5 - Prob. 14Q Ch. 5 - If average total assets increase, but net income,...Ch. 5 - Prob. 2MCQ Ch. 5 - Prob. 3MCQ Ch. 5 - Prob. 4MCQ Ch. 5 - Prob. 5MCQ Ch. 5 - Prob. 6MCQ Ch. 5 - Prob. 7MCQ Ch. 5 - Prob. 8MCQ Ch. 5 - Prob. 9MCQ Ch. 5 - Prob. 10MCQ Ch. 5 - Prob. 5.1ME Ch. 5 - Prob. 5.2ME Ch. 5 - Prob. 5.3ME Ch. 5 - Prob. 5.4ME Ch. 5 - Determining Financial Statement Effects of Sales...Ch. 5 - Prob. 5.6ME Ch. 5 - Prob. 5.7ME Ch. 5 - Matching Players in the Accounting Communication...Ch. 5 - Prob. 5.2E Ch. 5 - Finding Financial Information: Matching...Ch. 5 - Prob. 5.4E Ch. 5 - Preparing a Classified Balance Sheet Campbell Soup...Ch. 5 - Prob. 5.6E Ch. 5 - Preparing a Classified (Multiple-Step) Income...Ch. 5 - Prob. 5.8E Ch. 5 - Prob. 5.9E Ch. 5 - Prob. 5.10E Ch. 5 - Prob. 5.11E Ch. 5 - Stock Issuances and the Statement of Stockholders...Ch. 5 - Prob. 5.13E Ch. 5 - Prob. 5.14E Ch. 5 - Prob. 5.15E Ch. 5 - Prob. 5.16E Ch. 5 - Prob. 5.17E Ch. 5 - Prob. 5.18E Ch. 5 - Prob. 5.19E Ch. 5 - Matching Transactions with Concepts Following are...Ch. 5 - Matching Definitions with Balance Sheet-Related...Ch. 5 - Prob. 5.3P Ch. 5 - Prob. 5.4P Ch. 5 - Preparing a Classified (Multiple-Step) Income...Ch. 5 - Prob. 5.6P Ch. 5 - Determining and Interpreting the Effects of...Ch. 5 - Determining the Effects of Transactions on Ratios...Ch. 5 - Prob. 5.9P Ch. 5 - Prob. 5.1AP Ch. 5 - Preparing a Statement of Stockholders' Equity...Ch. 5 - Prob. 5.3AP Ch. 5 - Prob. 5.4AP Ch. 5 - Evaluating the Impact of Transactions on Statement...Ch. 5 - Prob. 5.2CON Ch. 5 - Finding Financial Information Refer to the...Ch. 5 - Finding Financial Information Refer to the...Ch. 5 - Prob. 5.3CP Ch. 5 - Prob. 5.4CP Ch. 5 - Prob. 5.5CP Ch. 5 - Prob. 5.6CP Ch. 5 - Prob. 5.7CP

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