chapter 1 key

chapter 1 key - SOLUTIONS TO CHAPTER ONE Exercise 1-5 (10...

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SOLUTIONS TO CHAPTER ONE Exercise 1-5 (10 minutes) Code Description Principle E 1. Usually created by a pronouncement from an authoritative body. Specific accounting principle G 2. Financial statements reflect the assumption that the business continues operating. Going-concern principle A 3. Derived from long-used and generally accepted accounting practices. General accounting principle C 4. Every business is accounted for separately from its owner or owners. Business entity principle D 5. Revenue is recorded only when the earnings process is complete. Revenue recognition principle B 6. Information is based on actual costs incurred in transactions. Cost principle F 7. Financial statement information is supported by evidence other than someone’s opinion or belief. Objectivity principle Exercise 1-6 (10 minutes) 1. C 4. A 2. F 5. G 3. D Exercise 1-11 (30 minutes)
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Assets = Liabilities + Equity Cash + Accounts Receivable + Equip- ment = Accounts Payable + Holden, Capital Holden, With- drawals + Revenue Expenses a. +$60,000 + $15,000 = + $75,000 b. 1,500 ______ ______ $1,500
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Bal. 58,500 + + 15,000 = + 75,000 1,500 c. _______ + 10,000 +$10,000 ______ _____ Bal. 58,500 + + 25,000 = 10,000 + 75,000 1,500 d. + 2,500 ______ _______ ______ + $2,500 _____ Bal. 61,000 + + 25,000 = 10,000 + 75,000 + 2,500 – 1,500 e. _______ + $8,000 ______ _______ ______ + 8,000 _____ Bal. 61,000 + 8,000 + 25,000 = 10,000 + 75,000 + 10,500 – 1,500 f. 6,000 ______ + 6,000 _______ ______ _____ _____ Bal. 55,000 + 8,000 + 31,000 = 10,000 + 75,000 + 10,500 –
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chapter 1 key - SOLUTIONS TO CHAPTER ONE Exercise 1-5 (10...

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