30 Jun Question Description This assessment includes t
Question Description
This assessment includes three parts. Use the Assessment 1 Template, which is an Excel workbook and is linked in the Resources under the Required Resources heading, to complete all three parts. You will find each of the three assessment parts under a separate worksheet in the template.
PART 1: BASIC ACCOUNTING EQUATION EFFECTS
Count everything, or almost everything. Just about every event that happens in a business results in changes to the assets, liabilities, or equities. For this reason, it is critical for the accountant to analyze how every business event affects the basic accounting equation, and how every event must be managed. Part 1 of the assessment is a good test of your critical thinking skills as you apply them to the components of the accounting cycle, in particular the basic accounting equation for the balance sheet.
Given below is a list of 15 business transactions. Using Part 1 of the Assessment 1 Template, indicate whether each transaction increased (+), decreased (–), or had no effect (NE) on assets, liabilities, and owner’s equity.
Purchased supplies on account.
Received cash for providing a service.
Paid expenses in cash.
Received an investment of cash from the owner.
Experienced a cash withdrawal by the owner.
Received cash from a customer who had previously been billed for services provided.
Paid cash to purchase equipment.
Paid employee salaries.
Paid a creditor from whom the business had previously purchased supplies on account.
Sold new shares of stock.
Paid cash for monthly rent on the office space.
Paid cash for monthly utility bills.
Performed services on account.
Made a payment on a loan received from the bank.
Purchased for cash merchandise that will be later resold for profit.
PART 2: MISSING ACCOUNTING EQUATION DATA
The accounting equation requires that it always be kept in balance after a business transaction has been processed. This requires the accountant to have applied knowledge of all parts of the equation and to be able to critically analyze when the equation is not in balance. Part 2 of the assessment provides you an opportunity to apply your accounting equation intelligence quotient.
Using your knowledge about the accounting equation, answer the following questions in Part 2 of the Assessment 1 Template. Be sure to show your calculations.
The liabilities of the Smith Company are $120,000 and its owner’s equity is $232,000. What is the amount of the company’s total assets?
The total assets of the Jones Company are $190,000 and its owner’s equity is $91,000. What is the amount of the company’s total liabilities?
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