ACC 205 Chapter 1 Solution (Horngren’s Accounting) – 2019

10 Jun ACC 205 Chapter 1 Solution (Horngren’s Accounting) – 2019

Accounting is the information system that

Which of the following is not an external user of a​ business’s financial​ information?

Generally Accepted Accounting Principles​ (GAAP) are currently formulated by the

Which type of business organization is owned by only one​ owner?

Which of the following characteristics best describes a​ corporation?

Which of the following requires accounting information to be​ complete, neutral, and free from material​ error?

The balance sheet reports the

Suppose you are starting a​ business, Wholly​ Shirts, to imprint logos on​ T-shirts. In organizing the business and setting up its accounting​ records, you take your information to a CPA to prepare financial statements for the bank. Name the organization that governs the majority of the guidelines that the CPA will use to prepare financial statements for Wholly Shirts. What are those guidelines​ called?

Michael McNamee is the proprietor of a property management​ company, Apartment​ Exchange, near the campus of Penscola State College. The business has cash of​ $8,000 and furniture that cost​ $9,000 and has a market value of​ $13,000. The business debts include accounts payable of​ $6,000. Michael’s personal home is valued at​ $400,000, and his personal bank account has a balance of​ $1,200. Identify the principle or assumption that best matches the​ situation:

Consider the following​ accounts:

Identify each account as​ Asset, Liability, or Equity.

 

a.

Accounts Payable

Liability

 

b.

Cash

Asset

 

c.

Common Stock

Equity

 

d.

Accounts Receivable

Asset

 

e.

Rent Expense

Equity

 

f.

Service Revenue

Equity

 

g.

Office Supplies

Asset

 

h.

Dividends

Equity

 

i.

Land

Asset

 

j.

Salaries Expense

Equity

Kennel earns service revenue by caring for the pets of customers. Tiny Town Kennel is organized as a corporation. During the past​ month, Tiny Town Kennel has the following​ transactions:

Indicate the effects of the business transactions on the accounting equation for Tiny Town Kennel. Transaction​ (a) is answered as a guide.

a. Received $520 cash for service revenue earned.

b. Paid $325 cash for salaries expense.

c. Received a $1000 contribution in exchange for common stock.

d. Earned $640 for service​ revenue, but the customer has not paid Tiny Town Kennel yet.

e. Received utility bill of $85​, which will be paid next month.

f. Cash dividends of $100 were paid to stockholders.

Identify the financial statement​ (or statements) that each account would appear on. Use I for Income​ Statement, RE for Statement of Retained​ Earnings, B for Balance​ Sheet, and C for Statement of Cash Flows. ​(If a box is not used in the​ table, leave the box​ empty; do not select a​ label.)

Consider the following accounting terms and​ definitions, and match each term to the​ definition:

​(Abbreviations used: Stmt.​ = Statement; ret.​ = retained; beg.​ = beginning.)

Indicate the effects of the following business transactions on the accounting equation of

Vivian’s Online Video store. Transaction​ (a) is answered as a guide.

a. Received cash of $10000 from issuance of common stock.

b. Earned video rental revenue on​ account, $2800

c. Purchased office furniture on​ account, $300

d. Received cash on​ account, $400

e. Paid cash on​ account, $100

f. Rented videos and received cash of $200

g. Paid monthly office rent of $1000

h. Paid $100 cash to purchase office supplies.

The account balances of Wilson Towing Service at June 30​, 2018​, ​follow:

Requirements

1. Prepare the income statement for Wilson Towing Service for the month ending June 30 2018

 

2.

What does the income statement​   report?

Requirement 1. Prepare the income statement for Wilson Towing Service for the month ending June 30​, 2018

​(If a box is not used in the table leave the box​ empty; do not select a label or enter a​ zero.)

Requirement 2. What does the income statement​ report?

The account balances and income statement of Wilson Towing Service at June 30​, 2018

Requirements

1. Prepare the statement of retained earning for Wilson Towing Service for month ending June 30 2018

 

2.

What does the statement of   retained earnings​ report?

Requirement 2. What does the statement of retained earnings​ report?

The account balances and select financial statements of Wilson Towing Service at June 30​, 2018

Requirements

1. Prepare the balance sheet for Wilson towing service as of June 30 2018

 

2.

What does the balance sheet​   report?

​(If a box is not used in the table leave the box​ empty; do not select a label or enter a​ zero.)

Requirement 2. What does the balance sheet​ report?

Appliance Service had net income for the year of $58500.

In​ addition, the balance sheet reports the following​ balances:

Calculate the return on assets​ (ROA) for Alice Appliance Service the year ending December​ 31, 2018

Thomas started a new​ business, Thomas ​Gymnastics, and completed the following transactions during December​:

Analyze the effects of the transactions on the accounting equation of Thomas Gymnastics.

Analyze the events​ chronologically, one transaction at a time. Beginning with the transaction on the​ 2nd, calculate the balance in each account after analyzing the effect of the transaction on the accounting equation. ​(Complete only the necessary answer boxes for your transaction lines.​ [Do not enter any zeros for your transaction​ lines.] Carry down all balances to the​ “Bal.” line, including zero balance​ accounts, entering a​ “0” for any zero balances. Enter a decrease in an account with a minus sign or parentheses. Abbreviations​ used: A/P​ = Accounts​ Payable; A/R​ = Accounts​ Receivable; Adv.​ = Advertising; Com.​ = Common; Contr.​ = Contributed; Div.​ =

Dividends​;

Exp.​ = Expense; Liab.​ = Liabilities; Off. Sup.​ = Office​ Supplies; Sal.​ = Salaries; Serv. Rev.​ = Service​ Revenue; Util.​ = Utility.)