Acct.550 Week 1

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CA1-3 (Financial Reporting and Accounting Standards) Answer the following multiple-choice questions. 1.GAAP stands for:
(d)generally accepted accounting principles.
2.Accounting standard-setters use the following process in establishing accounting standards: (d)Research, discussion paper, exposure draft, standard.
3.GAAP is comprised of:
(d)any accounting guidance included in the FASB Codification. 4.The authoritative status of the conceptual framework is as follows. (a)It is used when there is no standard or interpretation related to the reporting issues under consideration. 5.The objective of financial reporting places most emphasis on: (a)reporting to capital providers.

6.General-purpose financial statements are prepared primarily for: (b)external users.
7.Economic consequences of accounting standard-setting means: (d)accounting standards can have detrimental impacts on the wealth levels of the providers of financial information. 8.The expectations gap is:

(d)what the users of financial statements want from the government and what is provided.
E2-5 (Elements of Financial Statements) Ten interrelated elements that are most directly related to measuring the performance and financial status of an enterprise are provided below. Assets
Distributions to owners
Expenses
Liabilities
Comprehensive income
Gains
Equity
Revenues
Losses
Investments by owners
 
 
Instructions
Identify the element or elements associated with the 12 items below. (a)Arises from peripheral or incidental transactions. Gains/Losses (b)Obligation to transfer resources arising from a past transaction. Liabilities (c)Increases ownership interest. Investment by Owners Comprehensive Income (d)Declares and pays cash dividends to owners. Distribution to Owners (e)Increases in net assets in a period from nonowner sources. Comprehensive Income (f)Items characterized by service potential or future economic benefit. Assets (g)Equals increase in assets less liabilities during the year, after adding distributions to owners and subtracting investments by owners. Comprehensive Income (h)Arises from income statement activities that constitute the entity’s ongoing major or central operations. Revenue (i)Residual interest in the assets of the enterprise after deducting its liabilities. Equity (j)Increases assets during a period through sale of product. Revenue (k)Decreases assets during the period by purchasing the company’s own stock. Distribution to Owners (l)Includes all changes in equity during the period, except those resulting from investments by owners and distributions to owners. Comprehensive Income

E3-1 (Transaction Analysis—Service Company) Christine Ewing is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred. April 2 Invested $30,000 cash and equipment valued at $14,000 in the business. 2 Hired a secretary-receptionist at a salary of $290 per week payable monthly. 3 Purchased supplies on account $700. (debit an asset account.) 7 Paid office rent of $600 for the month. 11 Completed a tax assignment and billed client $1,100 for services rendered. (Use Service Revenue account.) 12 Received $3,200 advance on a management consulting engagement. 17 Received cash of $2,300 for services completed for Ferengi Co. 21 Paid insurance expense $110.

30 Paid secretary-receptionist $1,160 for the month. 30 A count of supplies indicated that $120 of supplies had been used. 30 Purchased a new computer for $5,100 with personal funds. (The computer will be used exclusively for business purposes.) Instructions

Journalize the transactions in the general journal. (Omit explanations.)...
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