The entry to record the receipt of a note from a charge customer in settlement of the account
debit Notes Receivable; credit Accounts Receivable.
When the maker of a note fails to pay the principal amount or to renew the note at maturity,
the note is
Macs Custom Catering Chart of Accounts:
Assets: Cash, Equipment, Insurance, Supplies, Account receivable
Liabilities: Accounts payable for supplies, equipment, and building space bought on credit
Owners Equity: Capital, Drawing
Revenues: Income from servi
1. What is the amount of interest recorded on December 31 on a $12,000, 45 day, 4% note,
dated December 10?
2. On July 15, a company discounts a $5,000, 120-day, 12 percent note at the bank. How
much does the company receive in proceeds?
Options for obtaining funding for a small business would be getting a loan, looking for investors
or even selling the idea to family or friends and have them help fund your small business
venture. I think something like Orange Julius could work every comm
When is it necessary to make an adjusting entry for accrued interest on an interest bearing
note receivable? Why? What is the adjusting entry? Can the adjusting entry be reversed?
It is necessary to adjust an interest bearing note when the note overlaps f
Assume the following data for Henry Company:
Under the perpetual FIFO method, cost of goods sold would be valued at
Assume the following data for Petty Company:
Petty Company uses a periodic inventory system. On December 31, a physical count
1. How does a corporation account for federal income taxes? What are the related
Corporations are required to estimate their taxes in advance for the upcoming year. At
the end of the year the company will know if they over paid or under p
What are the advantages and disadvantages of corporations issuing bonds compared with
Issuing stock, which means granting ownership in the firm to investors in exchange for money, is
a popular way for corporations to raise money. From a cor
Identify the main advantages and disadvantages of the corporate form of business
organization as a compared to sole proprietorship and general partnerships forms. In your
opinion, which is the greatest advantage and which is the greatest disadvantage?
The costs that should be included in the purchase of property and equipment would be the
expenditures to acquire, install and prepare the property and equipment for intended use.
Some examples of costs for a machine would be the cost of the machine, trans
What is included in cash as the term is used on a statement of cash flows?
Cash on the statement of cash flows includes cash which is currency and cash equivalents
which are short term high liquid investments.
What are the purposes of the statement of cas
A company has a net income percentage of 10%. What does that mean?
When a company has a net income percentage of 10% that means that their total net income has
increased 10% over the prior year.
What does an increase in accounts receivable turnover indica
Chapter 1 Lecture Notes
Accounting is the information system that measures business activities, processes the information into reports and
communicates the results to decision makers.
Language of business
Knowledge of accounting is used every d
Chapter 2 Lecture Notes
Assets = Liabilities + Equity
The net amount of Expenses and Revenue are added to equity.
Assets, Liabilities and Equity define categories of individual accounts.
The Account is a detailed record of all
Additional Study questions for Chapter 3
1) The accountant for Jones Auto Repair Company failed to make an adjusting entry to record $5,000 of
unpaid salaries for the last 2 weeks of the year. Which of the following is an impact of this omission?
A) The n
Chapters 1 & 2
11 Multiple Choice
Purpose of Financial Statements
o Total Assets
o Net Income
o Accounts Receivable
o Balance of Cash
#1 Identify acco
Explain the consistency principle. How can the consistency principle relate to inventory
The consistency principle requires that a particular accounting procedure be used and
once it is used it can be changed from one fiscal period to another. Co
Hiring a firm specializing in forensic accounting such as Feeley & Driscoll can help you
stop fraud from occurring because forensic accountants helps identify, gather and
interpret valid financial, economic and statistical information. Forensic accounting
Chapter 3 Discussion
1. Why is the journal called a book of original entry?
A journal is called a book of original entry because a transaction is always recorded first
in the journal, as they happen.
2. How does the journal differ from the ledger?
For Month Ended July 31,-Revenue:
Income from Services
Statement of Owners Equity
1. The trial balance is a listing of account balances in two columns, while the balance
sheet shows the financial position or the condition of the businesss assets offset by
claims against them as of one particular date.
2. The amount placed on a debit si
1. Assets Cash, properties, and other things of value owned by an economic unit
or a business entity.
Liabilities Debts or amounts owed to creditors.
Owners Equity The owners right to or investment in business.
Revenues The amounts a business earns such a
1. The purpose of a work sheet is that it is a tool for accountants to record necessary
adjustments and provide up to date account balances needed to prepare the financial
2. The purpose of adjusting entries is that the entries bring the books
The closing process is important because the company needs to clear their account at the end
of their fiscal period for the students, since they are using finances to fund this they would need
to close the accounts they used. Some of those accounts may be
1. D, B, A, F, I, G, E, G, H
2. Step 1: Close the revenue accounts into Income Summary. Step 2: Close the expense
accounts into the Income Summary. Step 3: Close the income summary account into the
capital account, transferring the net income or net loss
1. Internal controls are designed to: protect assets against fraud and waste, provide for
accurate accounting data, promote efficient operation and encourage adherence to
2. A signature card gives the bank a copy of the official signa
Transaction 1: Owner of Solid Rock Gym invested into a bank account in the name of
the company. Accounts involved: Cash and Solid Rock Gym Capital. Cash is debited
and Solid Rock Gym Capital is credited.
Transaction 2. Owner bought gym equipment on credit
1. Purchases debit
Sales Discounts credit
Purchases returns & allowances - credit
Purchases discounts credit
Sales returns & allowances debit
2. The X under the Other Accounts column means do not post the figures have
already been posted sepa
1. The difference between a wholesale business and a retail business is that a
wholesale business is a distributer that buys goods from a manufacturers and sells
them to retailers. While a retail business sells good right to consumers.
2a.) Sales returns