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introductory financial accounting
Financial Accounting For Hotels 1st Edition Prasanna Kumar JP, Linda Nalini Danie, Mruthyunjaya V. Pagad - Solutions
INCOME STATEMENT The following information is available for Wright Auto Supply at December 31, 2009.Cost of goods sold $277,000 Depreciation expense on building 29,000 Income taxes expense (30% of income before taxes) 37,260 Interest expense 2,700 Rent expense on equipment 18,000 Salaries,
MULTIPLE-STEP INCOME STATEMENT The following information is available for Bergin Pastry Shop.Gross margin $30,700 Income from operations 9,200 Income taxes expense (15% of income before taxes) ?Interest expense 1,800 Net sales 80,300 Required:Prepare a multiple-step income statement for
INCOME STATEMENT ERS, Inc., maintains and repairs office equipment. ERS had an average of 10,000 shares of common stock outstanding for the year. The following income statement account balances are available for ERS at the end of 2009.Advertising expense $ 24,200 Depreciation expense on service van
INCOME STATEMENT STRUCTURE The following accounts exist in the ledger of Butler Company: administrative salaries expense, advertising expense, cost of goods sold, depreciation expense on office equipment, interest expense, income tax expense, sales revenue, and salesperson salaries
CLASSIFIED BALANCE SHEET Jerrison Company operates a wholesale hardware business. The following balance sheet accounts and balances are available for Jerrison at December 31, 2009.Accounts payable $ 62,100 Accounts receivable 96,300 Accumulated depreciation on data processing equipment 172,400
CLASSIFIED BALANCE SHEET College Spirit sells sportswear with logos of major universities. At the end of 2009, the following balance sheet account balances were available.Accounts payable $106,300 Accounts receivable 6,700 Accumulated depreciation on furniture and fixtures 21,700 Bonds payable
STOCKHOLDERS’ EQUITY On January 1, 2009, Mulcahy Manufacturing, Inc., a newly formed corporation, issued 1,000 shares of common stock in exchange for $150,000 cash. No other shares were issued during 2009, and no shares were repurchased by the corporation. On November 1, 2009, the corporation’s
DEPRECIATION Swanson Products was organized as a new business on January 1, 2009. On that date, Swanson acquired equipment at a cost of $400,000, which is depreciated at a rate of$40,000 per year.Required:Describe how the equipment and its related depreciation will be reported on the balance sheet
CURRENT ASSETS AND CURRENT LIABILITIES Hanson Construction has an operating cycle of nine months. On December 31, 2009, Hanson has the following assets and liabilities:a. A note receivable in the amount of $1,000 to be collected in six months.b. Cash totaling $600.c. Accounts payable totaling
IDENTIFYING CURRENT ASSETS AND LIABILITIES Dunn Sporting Goods sells athletic clothing and footwear to retail customers. Dunn’s accountant indicates that the firm’s operating cycle averages six months. At December 31, 2009, Dunn has the following assets and liabilities:a. Prepaid rent in the
BALANCE SHEET STRUCTURE The following accounts exist in the ledger of Higgins Company: Accounts payable, Accounts receivable, Accumulated depreciation on building, Accumulated depreciation on equipment, Bonds payable, Building, Common stock, Cash, Equipment, Taxes payable, Inventory, Notes payable,
THE FUNDAMENTAL ACCOUNTING EQUATION Financial information for three independent cases is given below.Assets Liabilities Equitya. $107,000 $ ? $51,000b. 275,000 150,000 ?c. ? 15,000 65,000 Required:Compute the missing numbers in each of the three independent cases described above.Exercise
ACCOUNTING CONCEPTS A list of accounting concepts and related definitions are presented below.Concept Definition Revenue Expense Dividend Asset Stockholders’ equity Net income (loss)Liabilitya. Owner’s claim on the resources of a companyb. The difference between revenues and expensesc. Increase
BUSINESS ACTIVITIES Bill and Steve recently formed a company that manufactures and sells high-end kitchen appliances. The following are a list of activities that occurred during the year.a. Bill and Steve each contributed cash in exchange for common stock in the company.b. Land and a building to be
Can sell goods (merchandising)Owned by one person and legally not separate from the owner Can make and sell goods (manufacturing)Jointly owned by two or more persons and legally not separate from the owners Owned by one or more persons and legally separate from the owner(s)Can provide and sell
FORMS OF BUSINESS ORGANIZATIONS Listed below are the three types of business entities and definitions, examples, or descriptions.Entity Definition, Example, or Description Sole proprietorship
DECISIONS BASED ON ACCOUNTING INFORMATION Decision-makers use accounting information in a wide variety of decisions including the following:Deciding whether or not to invest in a business Deciding whether or not to lend money to a business Deciding whether or not an individual has paid enough in
STATEMENT OF RETAINED EARNINGS Parker Company has a balance of $25,000 in retained earnings on January 1, 2009. During 2009, Parker reported revenues of $60,000 and expenses of $47,000. Parker also paid a dividend of $8,000.Required:What is the amount of retained earnings on December 31,
INCOME STATEMENT An analysis of the transactions of Canary Cola, Inc., for the year 2009 yields the following information: revenue, $70,000; supplies expense, $30,900; rent expense, $24,000;and dividends, $7,000.Required:What is the amount of net income reported by Canary Cola for 2009?Cornerstone
BALANCE SHEET An analysis of the transactions of Cavernous Homes, Inc., yields the following totals at December 31, 2009: cash, $2,200; accounts receivable, $5,100; notes payable, $4,000;supplies, $8,500; common stock, $10,000; and retained earnings, $1,800.Required:Prepare a balance sheet for
BALANCE SHEET Listed below are items that may appear on a balance sheet.Item Classification Accounts payable Machinery Inventory Common stock Notes payable Cash Copyright Net income less dividends Accumulated depreciation Accounts receivablea. Current assetsb. Property, plant, and equipmentc.
FINANCIAL STATEMENTS Listed below are elements of the financial statements.a. Revenueb. Assetsc. Dividendsd. Net change in cashe. Expensesf. Cash flow from operating activities g. Liabilities h. Stockholders’ equity Required:Match each financial statement item with its financial statement:
USING THE ACCOUNTING EQUATION At the beginning of the year, Morgan Company had total assets of $325,000 and total liabilities of $225,000.Required:Use the fundamental accounting equation to answer the following independent questions:a. What is total stockholders’ equity at the beginning of the
USING THE ACCOUNTING EQUATION Listed below are three independent scenarios.Scenario Assets Liabilities Equity 1 (a) $39,000 $40,000 2 $125,000 (b) 75,000 3 $ 23,000 $12,000 (c)Required:Use the fundamental accounting equation to find the missing amounts.Cornerstone Exercise
BUSINESS ACTIVITIES Listed below are various activities that companies engage in during a period.a. The sale of goods or servicesb. The purchase of equipmentc. The payment of a dividendd. The purchase of suppliese. Contribution of cash by ownersf. The sale of equipment g. Borrowed money from a bank
FORMS OF BUSINESS ORGANIZATION Consider the forms of business organization discussed in the chapter.Required:What are the three different forms of business organization? List the advantages and disadvantages of each form.Cornerstone Exercise
Which of the following statements is true?a. The auditor’s opinion is typically included in the notes to the financial statements.b. The notes to the financial statements are an integral part of the financial statements that clarify and expand on the information presented in the financial
Which of the following sentences regarding the statement of cash flows is false?a. The statement of cash flows describes the company’s cash receipts and cash payments for a period of time.b. The ending cash balance on the statement of cash flows equals the change in cash shown on the balance
Which of the following statements concerning retained earnings is true?a. Retained earnings is the difference between revenues and expenses.b. Retained earnings is increased by dividends and decreased by net income.c. Retained earnings is reported as a liability on the balance sheet.d. Retained
For the most recent year, Grant Company reported revenues of $150,000, cost of goods sold of $84,000, inventory of $5,000, salaries expense of $40,000, rent expense of $15,000, and cash of $20,000. What was Grant’s net income?a. $66,000b. $11,000c. $26,000d. $95,000
Which of the following statements regarding the income statement is true?a. The income statement shows the results of a company’s operations at a specific point in time.b. The income statement consists of assets, expenses, liabilities, and revenues.c. The income statement provides information
Using the information in Multiple-Choice Exercise 1-7, what is Marker’s stockholders’ equity?a. $22,500b. $18,200c. $12,500d. $5,700
At December 31, Marker reported the following items: cash, $12,200;inventory, $2,500; accounts payable, $4,300, accounts receivable, $3,500;common stock, $5,900; property, plant, and equipment, $10,000; interest payable, $1,400; retained earnings, $16,600. What is the total of Marker’s current
Which of the following is not shown in the heading of a financial statement?a. The title of the financial statementb. The name of the auditorc. The name of the companyd. The time period covered by the financial statement
What type of questions do the financial statements help to answer?a. Is the company better off at the end of the year than at the beginning of the year?b. What resources does the company have?c. What did a company use its cash for during the year?d. All of the above.
Which of the following is not one of the four basic financial statements?a. auditor’s reportb. income statementc. balance sheetd. statement of cash flows
At December 31, Pitt Inc. has assets of $8,500 and liabilities of $6,300.What is the stockholders’ equity for Pitt at December 31?a. $14,700b. $10,700c. $ 8,500d. $ 2,200
Which of the following statements regarding business activities is true?a. Operating activities involve buying the assets that enable a company to generate revenue.b. Investing activities center around earning interest on a company’s investments.c. Companies spend a relatively small amount of
Which of the following statements is false concerning forms of business organization?a. A sole proprietorship is an easy type of business to form.b. It is easier for a corporation to raise large sums of money than it is for a sole proprietorship or partnership.c. A corporation has tax advantages
What are the career paths of accountants?
What credentials are useful for a career in accounting?
What skills and character traits are required for accountants?
Would you allow Thin Inc. to purchase the exercise equipment on credit?
Is there likely to be any change in the relationship between current assets and current liabilities during the period of the loan?
What is the present relationship between Thin’s current assets and current liabilities?
What is the impact of organizational form on control of the business?
How does organizational form impact Brooks’ ability to obtain the needed funds?
How can decision-makers use the information provided by the accounting system?
How does the accounting system report these activities?
What are the basic activities in which businesses engage?
What forms do businesses take?
Describe other information contained in the annual report and the importance of ethics in accounting..
Describe the relationships among the financial statements.
Understand the information communicated by the statement of cash flows.
Prepare the statement of retained earnings and understand the information it communicates.
Prepare an income statement and understand the information it communicates.
Prepare a classified balance sheet and understand the information it communicates.
Describe the relationships shown by the fundamental accounting equation.
Identify the forms of business organizations and the types of business activities.
Explain the nature of accounting.
Show the effect of the following transactions on accounting equation:(a) Started business with cash ` 50,000(b) Salaries paid ` 2000(c) Wages outstanding ` 200(d) Prepaid Insurance ` 700(e) Interest due but not paid ` 100(f) Rent paid in advance ` 150
Anil had the following transactions in an accounting year:(a) Commenced business with cash ` 50,000(b) Purchased goods for cash ` 20,000 and on credit ` 30,000(c) Sold goods for cash ` 40,000 costing ` 30,000(d) Rent paid ` 500(e) Rent outstanding ` 100(f) Bought printer on credit ` 5000(g) Bought
Develop accounting equation from the following transactions:`(i) Mohan started a restaurant business with cash 50,000(ii) Purchased groceries for cash 30,000(iii) Purchased vegetables, fruits, meat products on credit from Ram 20,000(iv) Sold food (cost ` 10,000) for 12,000(v) Bought Kitchen
State the effect of the following transactions on assets, liabilities and capital using the accounting equation:(i) Started business with cash ` 60,000(ii) Rent Received ` 2000(iii) Accrued interest ` 500(iv) Commission received in advance ` 1000(v) Amount withdrawn ` 5000
(a) A starts a business and invests ` 50,000 on January 1, 2005. On December 31, 2005, his assets are ` 65,000 and liabilities are ` 6000. Find out the amount of capital on December 31, 2005. Also find out his profit.(b) In respect of the above, if the proprietor had invested ` 5000 as additional
Explain the following terms:(a) Debtor (b) Creditor (c) Assets (d) Liabilities(e) Capital (f) Drawings (g) Revenue (h) Expense(i) Income (j) Losses
What do you understand by GAAPs?
How is the going concern concept and the accruals concept related?
Discuss briefly the relationship of accounting with (i) Economics, (ii) Statistics, (iii) Mathematics, (iv) Law, and (v) Management.
E = A – l. What does this equation imply? Can it be an equation?
What are the sub-fields of accounting? Distinguish between bookkeeping, financial accounting and management accounting.
Define accounting. Who are the users of accounts? State briefly the information needs of the user of accounts.
Give five examples of business transactions and show how they affect the basic accounting equation.
What are the objectives of accounting?
State and explain the rules of debit and credit according to European system of accounting.
What are the advantages of double entry system?
State the different types of accounts with examples.
What is double entry system?
What is meant by single entry system?
What is bookkeeping?
Name the account to be debited and credited in each of the following transactions:(a) Received cash from Ahmed(b) Paid cash into bank(c) Bought of Rehman, Groceries and Vegetables(d) Purchased fruits for cash(e) Paid for carriages(f) Purchased furniture from Bright Furniture Mart(g) Paid wages to
Match the following:A B (a) Real A/c is credited (i) for what is received (b) Personal A/c is debited (ii) when something is going out (c) Nominal A/c is credited (iii) When a person is the giver (d) Real A/c is debited (iv) when there is a gain (e) Personal A/c is credited (v) for expenses (f)
State whether the following classification is correct or not. Give the correct classification, if necessary:(a) Furniture and Fixtures A/c Personal A/c(b) Bright Brother's A/c Real A/c(c) Travelling Expenses A/c Nominal A/c (d) Cash A/c Personal A/c (e) Rent and Rates A/c Real A/c(f) Pai and Co's
From the alternatives given in the brackets, against each of the following, pick out the correct one:(a)(i) Personal Account-(Delivery Van's A/c, Salary A/c, Interest A/c, John's A/c)(ii) Nominal Account (Cutlery and Crockery A/c, Commission A/c, Raghavan's A/c, Buildings A/c)(iii) Real
State what type of accounts are the following:(a) Goods Account(b) Interest Paid Account(c) Ravi Brothers Account(d) Capital Account (e) Cash Account (f) Salaries Account(g) Raja's Account(h) Building Account (i) Equipment Account (j) Postage Account (k) Sale of Rooms Account (l) Purchase of
Show the Accounting Equation on the basis of the following transactions and present a Balance Sheet:(i) Mohan commenced pastry confectionary business ` 70,000(ii) Purchased pastry ingredients on credit ` 14,000(iii) Withdrew for private use ` 1700(iv) Ingredients purchased for cash ` 10,000(v) Paid
Show the effect of following transactions on Accounting Equation:(i) Started hotel business with cash ` 50,000(ii) Salaries paid ` 2000(iii) Wages outstanding ` 200(iv) Prepaid insurance ` 700(v) Interest due but not paid ` 100(vi) Rent paid in advance ` 150(Assets: ` 48,000; Liabilities: ` 300;
The cash book of Mona Lisa Restaurant shows a balance of 12,500 on 31 December 1992. On comparing the cash book with the passbook, the following discrepancies were noted:Prepare a Bank Reconciliation Statement as on 31 December 1992. (a) Cheques issued but not yet presented for payment (b) Cheques
Prepare a Bank Reconciliation Statement from the following particulars: R Bank overdraft as per cash book Cheques deposited in bank but no entry was passed in the cash book Cheques received but not sent to bank 8000 300 1000 Credit side of the bank column of the cash book short Insurance of premium
Prepare a Bank Reconciliation Statement from the following particulars and ascertain the passbook balance. (a) Bank overdraft as per cash book 18,000 1300 1100 (b) Cheques deposited into bank but no entry was made in the cash book (c) Cheques received and entered in cash book but not sent to bank
On 31 March 2002, the bank column of the cash book showed a credit balance of ` 11,810. On examination of the cash book and bank statement, you find that: (a) Cheques issued amounting to 17,520 in March 2002 had been entered in the cash book as 17,250. These cheques were not presented at the bank
Prepare a Bank Reconciliation Statement as on 31 December 2008 from the following extracts: Cash Book Dr. Cr. Date Particulars L/F Amount Date Particulars L/F Amount 2008 Dec. 1 To Balance b/d 1.000 2008 Dec. 1 By Basava 250 4 To Kumar 800 13 By Salary 750 7 To Sales 500 18 By Purchases 300 10 To
Make the bank reconciliation statement from the following:(a) Debit balance as per cash book 1500(b) Cheques deposited but not cleared 100(c) Cheques issued but not presented 150(d) Bank interest 20 2. Prepare a bank reconciliation statement from the following information: Cash at bank as shown by
Prepare Trading and Profit and Loss A/c and Balance Sheet as on 31.03.2005 from the following informations:Adjustments:(a) Closing Stock 1450(b) Depreciate Plant and Machinery by 400(c) Allow 5% Interest on capital(d) A sum of 40 is due for repairs Capital 10,000 Creditors 1200 Wages Bank 5000 1000
Prepare a departmental Trading and Profit and Loss A/c from the following:Sales – Restaurant ` 5,00,000 Banquet – ` 3,00,000 Bar – ` 2,00,000 Cost of Sales – Restaurant – ` 2,00,000 Banquet – ` 1,20,000 Bar – ` 75,000 Wages and Salaries – Restaurant – ` 90,000 Banquet – ` 35,000
The following registration particulars are of a guest who has checked into Room No. 102:G. Regn No. 2999 Plan: CP Rate: 2500 Room No: 102 Pax: 2 Name: Mr. Ramakanth Arrival Date: 20 Apr. 07 Dep. Date : 22 Apr. 07 Arrival Time: 12 Noon Dep. Time: 09.00 AM The following transactions took place during
From the following Trial Balance of Saagar Samraat Restaurant, as on December 31, 2004, prepare Trading and Profit and Loss A/c and Balance Sheet:Adjustments:(a) Closing Stock 45,000(b) Depreciate Land and Building at 2% and Furniture at 5%(c) Rent of 200 paid in advance(d) Outstanding wages 440
Compile a Trading and Profit and Loss A/c (Department Wise) for the year ending 31.3.2004 from the details showing the maximum amount of information possible:Repairs and maintenance 24,400 Depreciation 15,000 Administration expenses 10,900 Sales advertising and promotion 7600 Rates 19,800 Sundry
From the following Trial Balance of Richie Rich Restaurant, as on December 31, 2004, prepare Trading and Profit and Loss A/c and Balance Sheet:Adjustments: Charge depreciation on Machinery 4% and on Building 5%. Allow 5% interest on capital. Stock on 31.12.2004, 14,300. Cr. Balances: Capital
Consider the following Income Statement for the Double. K Hotel.Indirect expenses will be allocated on the basis of number of employees.Department No. of Employees Rooms 55 Food and Beverage 70 Gift Shop 01 You are required to prepare a fully-allocated income statement using a single allocation
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