AC 107 Week 2 Discussion New
Analyzing Financial Transactions: In Chapter 4 of your text, pages 90 – 93, carefully review the accounting transactions for Rohan’s Campus Delivery and how they are entered in the general journal. Before you begin please watch the video demonstrations of the completion of these journal entries in the Week 2 Classroom.
Once you understand how these journal entries are prepared, please select one transaction from the list of transactions for Barry Bird Basketball Camp in the Mastery Problem on pages 125-126 and answer the questions below for that transaction. There are 23 journal entries in this problem, so each of you must select an entry that has not been completed by a classmate! First come, first served! Please be sure to identify your entry by the date of the transaction and provide your response in your own words. One helpful way to reach the minimum 250-word count requirement is to define any new terms or explain any new concepts that you are using.
What happened? (Describe the transaction
Which two accounts are affected by this transaction? Are they increased or decreased?
What type of accounts is each of the two that are affected (assets, liabilities, owner’s equity, revenue, expense)?
What is the normal balance of each of these two accounts? (Normal debit balance or normal credit balance?)
In the journal entry, which account is debited and which account is credited?
Ethics Question: Bob Jones owns a small business as a sole proprietor. One day he used the company debit card to fill up the gas tank in his wife’s car that was not used for business purposes. Using a debit card takes money out of his bank account immediately. He told his bookkeeper to record a debit for the $40 charge to the account “Auto Expense” and to record the credit to Cash.
What account should the gas have been debited to?
What account would be credited?
What accounting concept has been violated? (Hint: Check your vocabulary matching exercise in the Week 1 Assignment.)
How will this transaction affect the income statement for this month?
Do you think this is ethical? Why or why not?
Adjusting Journal Entries: Note: Before you answer this question be sure to review the information about these journal entries in your text and the video presentations and the supplementary materials. Select one of the four following types of adjustments and answer all of the questions below as they relate to the adjustment you have chosen. Remember, your primary posting must be a short answer essay of at least 250 words that fully explains each part of the question.
Record depreciation expense
Adjust for supplies usage
Adjust prepaid insurance
Accrue wages earned but not yet paid
Why is this adjusting journal entry prepared?
Which accounts are affected? Are they increased or decreased?
Which account is debited and which one is credited? How do we determine the amount of the adjustment debit and credit?
Are the affected accounts assets, liabilities, owner’s equity, revenue, or expense accounts?
Are these accounts reported on the income statement, statement of owner’s equity, or the balance sheet?
Cash vs. Accrual Accounting: Explain the difference between the cash basis, modified cash basis, and the accrual basis measures of performance. Provide examples of accounts that are treated differently under the three methods. Be sure to review the related PowerPoint Presentation in the Unit 3 Presentations/Lectures and in the Supplementary Materials.
Why, in most cases, does accrual basis net income provide a better measure of performance than cash basis net income?
Explain the purpose of adjusting entries as they relate to the difference between cash and accrual accounting. Which generally accepted accounting principle (GASP) rule does accrual accounting fulfill
Financial Statements: This question MAY NOT be used as your primary posting. It may be answered only as a secondary or reply post with a minimum 100-word count requirement. The three primary financial statements that we have seen so far are the Balance Sheet, Statement of Owner’s Equity, and the Income Statement. Please describe which account categories belong on which statement and identify them as temporary or permanent accounts. These statements must be prepared in a particular order. Which statements are prepared first, second, and third? Why do we have to prepare them in this order?
Generally Accepted Accounting Principles: This question MAY NOT be used as your primary posting. It may be answered only as a secondary or reply post with a minimum 100-word count requirement.This week we have learned about four of the generally accepted accounting principles – revenue recognition, expense recognition, the matching principle, and the historical cost principle. Briefly explain what is meant by each of these and how they are applied to accrual accounting.