Ch3prob - Ketz-Accounting Cycle Page 3-55 REVIEW QUESTIONS...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Ketz--Accounting Cycle Page 3-55 REVIEW QUESTIONS 1. What is the periodicity principle? 2. What are transactions and transactions processing? 3. Describe the accounting cycle. 4. What is a journal? What is a journal entry? Distinguish between a general journal and a special journal. 5. State the accounting identity. 6. What is an account? Differentiate between balance sheet accounts and nominal accounts. 7. Define debits and credits. What do they show about changes in accounts? 8. What is the normal balance for assets, liabilities, stockholders’ equities, revenues, expenses, and dividends? 9. What is a contra account, and how does it differ from a normal account? 10. How does one write a journal entry? 11. Describe a general journal. 12. What is posting and why is it done? 13. Distinguish between a general ledger and a subsidiary ledger. 14. Define chart of accounts. 15. Describe the general ledger. 16. What is a trial balance? What are the three trial balances and what is different about them? 17. What is an adjusting entry and what is its purpose? 18. What is the realization principle? 19. What is the matching principle?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Ketz--Accounting Cycle Page 3-56 20. What are the five types of adjusting entries? What distinguishes deferrals from accruals from valuation adjustments? 21. What is the formula for straight-line depreciation? 22. What are closing entries and what is the purpose of closing entries? DISCUSSION QUESTIONS 1. We have asserted that if a transaction is recorded so that debits equal credits, then the accounting identity holds true. Let’s simplify the proposition in two ways. First, let’s define equities to be liabilities (creditors’ equities) plus stockholders’ equities, so that the accounting identity becomes assets equal equities. Second, let’s restrict the set of transactions to those with only one debit and one credit. With these simplifications, prove that if a transaction is recorded so that the debit equals the credit, then assets equal equities. Hint: The proof should assume initially that assets equal equities. Then a transaction occurs and is recorded. You need to show that assets equal equities after this transaction is recorded. Note that there are only four types of transactions; consider each of these four cases separately. 2. One benefit of the periodicity principle is that it increases comparability. How does periodicity accomplish this? 3. Some accounting theorists have stated that there are two types of matching: product matching and period matching. Product matching implies that product costs, including transportation, are put into an inventory account until the product is sold, when the costs
Background image of page 2
Ketz--Accounting Cycle Page 3-57 are transferred from inventory to cost of goods sold. Period matching says that costs other than product costs are to be expensed in the period in which they occur. Given that the matching principle claims that an expense ought to be recorded in the same period that its associated revenue is recorded, how well is this objective met by product
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 20

Ch3prob - Ketz-Accounting Cycle Page 3-55 REVIEW QUESTIONS...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online