181553_Accg105 Week 1-6 Lecture Handout solution

181553_Accg105 Week 1-6 Lecture Handout solution - Accg105...

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Accg105 Week 1 Lecture Handout Q1. What is accounting information used for? To assist users make economic decisions Q2. Provide 3 examples of users of accounting information. Shareholders, creditors, potential investors, managers, govt, etc Q3. Classify each of the accounts below as Asset (A), Liability (L), Owner’s Equity  (OE), Income (I) or Expense (E). Capital OE Land A Wages Expense E Inventory A Equipment A Accounts Payable L Mortgage L Interest I or E Accounts Receivable A Bank Loan L Supplies A Drawings OE Bank Overdraft L Rent I or E Sales I Vehicles A Q4. If revenue is $180 000, rent expense is $120 000 and advertising  expense is $10 500, net profit or net loss is?  A. $300 500 profit  B.  $49 500 profit  C. $49 500 loss  Page 1 of 18
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D. $300 500 loss  Q5. If cash is $1 000, accounts receivable is $2 000, equipment is  $10 000 and mortgage is $6 500, owner’s equity is?  A. $19 500  B.  $2 500  C. $6 500  D. Cannot be determined from this information  Q6. Show how each of the following transactions affects the accounting equation,  noting whether it will be an increase or decrease to Assets, Liabilities or  Owner’s Equity including the account affected. 1. Owner invests cash into the business, depositing the cash into the  business bank account 2. Purchased equipment by paying cash 3. Purchased supplies on credit 4. Performed services for customers and received cash payment 5. Paid wages to staff 6. Owner withdrew cash for personal use 7. Used the supplies purchased in 3. 8. Paid for the supplies that were previously purchased on credit Answer: 1. Increase asset (cash), increase owner’s equity (capital) 2. Increase asset (equipment), decrease asset (cash) 3. Increase asset (supplies), increase liability (accounts payable) 4. Increase asset (cash), increase owner’s equity (services income) 5. Decrease asset (cash), decrease owner’s equity (wages  Page 2 of 18
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expense) 6. Decrease asset (cash), decrease owner’s equity (drawings) 7. Decrease asset (supplies), decrease owner’s equity (supplies  expense) 8. Decrease asset (cash), decrease liability (accounts payable) Accg105 Week 3 Lecture Handout Q1. For each of the accounts below show whether the normal balance is debit or credit.  Indicate whether the account would appear in the balance sheet or income statement  and under what classification eg. asset, liability, equity, income or expense. Item
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This note was uploaded on 05/20/2010 for the course MARKETING 107 taught by Professor Vivian during the Spring '10 term at SCA NC.

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181553_Accg105 Week 1-6 Lecture Handout solution - Accg105...

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