Chapter 3 - ©Cambridge Business Publishers, 2011 Solutions...

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Unformatted text preview: ©Cambridge Business Publishers, 2011 Solutions Manual, Chapter 3 3-1 Chapter 3 Adjusting Accounts for Financial Statements Learning Objectives – coverage by question Mini- exercises Exercises Problems Cases LO1 – Identify the major steps in the accounting cycle. LO2 – Review the process of journalizing and posting transactions. 21, 22, 23, 25, 29, 30 33, 35, 36, 38 40, 41, 42, 46, 47, 52, 54 55, 56, 57, 58 LO3 – Describe the adjusting process and illustrate adjusting entries. 23, 24, 25, 29, 30 32, 33, 34, 35, 36, 38 40, 41, 42, 43, 46, 47, 48, 49, 52, 53, 54 55, 56, 57, 58 LO4 – Prepare financial statements from adjusted accounts. 26 39 40, 41, 42, 44, 47, 49, 50, 53, 54 55, 58 LO5 – Describe the process of closing temporary accounts. 27, 28, 30 31, 33, 37, 39 42, 44, 45, 46, 49, 50, 51, 52, 53, 54 55 LO6 – Analyzing changes in balance sheet accounts. 25, 29 32, 34, 35, 36, 38 53 56 ©Cambridge Business Publishers, 2011 Financial Accounting, 3 rd Edition 3-2 Q UESTIONS Q3-1 The five major steps in the accounting cycle are 1. Analyze business activity using transaction analysis based on the related source documents. 2. Record results of the transaction analysis chronologically in the general journal and create a trial balance. 3. Adjust the recorded data to update all accounts for expense and revenue recognition not previously recognized. 4. Report the adjusted financial data in the form of financial statements. 5. Close the books by posting the adjusting and closing entries, which ―zero out‖ the temporary accounts. Q3-2 The fiscal year is the annual accounting period adopted by a firm. A firm using a fiscal year ending on December 31 is on a calendar-year basis. Q3-3 Examples of source documents that underlie business transactions are invoices sent to customers, invoices received from suppliers, bank checks, bank deposit slips, cash receipt forms, and written contracts. Q3-4 A general journal is a book of original entry that may be used for the initial recording of any type of transaction. It contains space for dates and for accounts to be debited and credited, columns for the amounts of the debits and credits, and a posting reference column for numbers of the accounts that are posted. Q3-5 When entries are posted, the page number and identifying initials of the appropriate journal are placed next to the amounts in the appropriate accounts. The account number is entered beside the related amount posted in the journal's posting reference column. This procedure enables interested users to trace amounts in the ledger back to the originating journal entry and permits us to know which entries have been posted. Q3-6 A compound journal entry is a journal entry containing more than one debit entry or one credit entry....
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This note was uploaded on 08/16/2011 for the course ECON 300 taught by Professor Laren during the Spring '11 term at Missouri State University-Springfield.

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Chapter 3 - ©Cambridge Business Publishers, 2011 Solutions...

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