Ch03 - CHAPTER 3 THE ACCOUNTING CYCLE FULFILLMENT OF...

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Unformatted text preview: CHAPTER 3 THE ACCOUNTING CYCLE FULFILLMENT OF LEARNING OBJECTIVES Learning Objective Review Question Discussion Question Exercise Problem 1. Describe the accounting cycle. 1-3 2 2-4 2. Prepare journal entries. 4-10 1 1-4 1-4 3. Describe the general journal. 11 5 2-4 4. Post journal entries. 12 2-4 5. Describe the general journal. 13-15 2-4 6. Construct a trial balance. 16 6-7 2-4 7. Make adjusting entries. 17-21 3-5 8-10 2-4 8. Make closing entries. 22 11,12 2-4 Ketz--Accounting cycle Page 3-2 ATTRIBUTES OF EXERCISES AND PROBLEMS Exercise/ Problem Description Difficulty Level Estimate Time (minutes) EXERCISES 1 Journal entries. Medium 15-25 2 Journal entries. Medium 15-25 3 Journal entries. Medium 15-25 4 Journal entries—stockholder transactions. Medium 15-20 5 Posting and trial balance. Simple 10-15 6 Error found with trial balance Difficult 15-20 7 Trial balances Simple 5-10 8 Adjusting entries. Medium 15-20 9 Adjusting entries—working backwards. Medium 15-25 10 Depreciation entries Medium 15-20 11 Closing entries. Simple 15-20 12 Closing entries. Medium 15-25 PROBLEMS 1 Identifying accounts of a manufacturer. Medium 25-30 2 Complete accounting cycle for service industry. Medium 40-60 3 Complete accounting cycle for merchandiser. Medium 45-90 4 Complete accounting cycle for merchandiser. Medium 60-120 Ketz--Accounting cycle Page 3-3 ANSWERS TO REVIEW QUESTIONS 1. The periodicity principle states that accounting reports should be prepared on a periodic basis such as once per year, or quarter, or month. 2. A transaction is an exchange, a nonreciprocal transfer, an event, or an allocation of the entity. Transactions processing comprises all of the activities that transform data about a firm's transactions into the firm's financial statements. 3. The accounting cycle lists the steps in transactions processing. First, the bookkeeper prepares a journal entry for the transaction and writes this journal entry in a journal. Second, the journal entry is posted to a ledger. Third, the accountant makes the unadjusted trial balance. Fourth, the accountant enters adjusting entries into the journal. Fifth, the accountant posts the adjusting entries to the ledger. Sixth, the adjusted trial balance is prepared. Seventh, the accountant constructs the financial statements. Eighth, the accountant makes closing entries and, ninth, posts them. Tenth, the post-closing trial balance is constructed. 4. A journal is a chronological record of the economic effects of an entity's transactions. A journal entry is the recording of the economic effects of a particular transaction. A general journal is a journal that records all transactions not entered in a special journal. A special journal is a journal that records only certain types of transactions, such as sales, cash receipts, purchases, and cash disbursements. Ketz--Accounting cycle Page 3-4 5. The accounting identity states that assets equal liabilities plus stockholders' equity....
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This note was uploaded on 01/26/2011 for the course HRIM 318 taught by Professor Howard,paul during the Fall '10 term at Penn State.

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Ch03 - CHAPTER 3 THE ACCOUNTING CYCLE FULFILLMENT OF...

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