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- Analyze Trusty Companys trial balance and the additional information provided to determine the following: A. what is causing the trial balance to be out of balance B. any other errors that require corrections that are identified during your analysis C. the effect (if any) that correcting the errors will have on the accounting equation A review of transactions revealed the following facts: A service fee of $18,000 was earned (but not yet collected) by the end of the period but was accidentally not recorded as revenue at that time. A transposition error occurred when transferring the account balances from the ledger to the trial balance. Salaries expense should have been listed on the trial balance as $64,500 but was inadvertently recorded as $46,500. Two machines that cost $9,000 each were purchased on account but were not recorded in company accounting records.Choose the correct letter of the answer for each question. 1. The balance of allowance for bad debts in Entity A’s unadjusted trial balance is ₱100,000. If the adjustments columns in the worksheet show a debit adjustment of ₱20,000, how much is the balance of allowance for bad debts that is extended to the adjusted trial balance columns of the worksheet? a. 80,000 b. 100,000 c. 120,000 d. 0 2. The business acquires equipment. The business allocates the equipment’s cost over the equipment’s useful life, instead of expensing it right away. The portion of the equipment’s cost that is expensed during the period is recorded as a. Depletion expense. b. Extraction expense. c. Amortization expense. d. Depreciation expense. 3. Net sales minus cost of sales equals a. Gross profit. b. Net sales. c. Net profit. d. Net cost. 4. Which of the following is equal to total goods available for sale? A. Net purchases –…Listed below are the current Accounting Assumptions and Principles Economic Entity Assumption Monetary Unit Assumption Historical Cost Principle Going Concern Assumption Revenue Recognition Principle Full Disclosure Principle Time Period Assumption Matching Principle Required: For the following situations, identify whether the situation represents a violation or a correct application of GAAP, and which assumption/principle is applicable. a. In May 2021, Regent Corporation recorded as revenue $5,000 received in advance from a customer for a job that would be completed in June 2021. Violation: (Yes/No) Applicable Assumption/Principle: b. Sally Maze made sure to keep her personal expenditures separate from her marketing company books.…
- Identify the letter for the principle or assumption from A through F in the blank space next to each numberedsituation that it best explains or justifies.A. General accounting principleB. Measurement (cost) principleC. Business entity assumptionD. Revenue recognition principleE. Expense recognition (matching) principleF. Going-concern assumption In December of this year, Chavez Landscaping received a customer’s order and cash prepayment to install sod at a house that would not be ready for installation until March of next year. Chavez should record the revenue from the customer order in March of next year, not in December of this year.Enter the letter A through H for the principle or assumption in the blank space next to each numbered description that it best reflects. A. General accounting principle B. Measurement (cost) principle C. Business entity assumption D. Revenue recognition principle E. Specific accounting principle F. Expense recognition (matching) principle G. Going-concern assumption H. Full disclosure principle 1. A company reports details behind financial statements that would impact users’ decisions. 2. Financial statements reflect the assumption that the business continues operating. 3. A company records the expenses incurred to generate the revenues reported. 4. Concepts, assumptions, and guidelines for preparing financial statements. 5. Each business is accounted for separately from its owner or owners. 6. Revenue is recorded when products and services are delivered. 7. Detailed rules used in reporting events and transactions. 8. Information is based on actual costs incurred in transactions.Solve the following problem in good accounting form. On May 1, 2010, Jollibee Inc., a franchisor, entered into a franchise agreement with Session Delights, a franchisee. The total franchise fees agreed upon is P11,900,000 of which P5,000,000 is payable upon signing and the balance payable in three annual payments. It was agreed that the down-payment is nonrefundable, not withstanding the lack of substantial performance of services by franchisor. What amount of deferred revenue should be reported in the May 1, 2010 financial statements of Jollibee Inc.?
- Identify the letter for the principle or assumption from A through F in the blank space next to each numberedsituation that it best explains or justifies.A. General accounting principleB. Measurement (cost) principleC. Business entity assumptionD. Revenue recognition principleE. Expense recognition (matching) principleF. Going-concern assumption If $51,000 cash is paid to buy land, the land is reported on the buyer’s balance sheet at $51,000.4.2 An accrued expense of R500 was recorded as a prepaid expense during the adjustment process. The effect of the error would have caused the________. A Gross profit to be understated by R500 B Gross profit to be overstated by R500 C Net profit to be understated by R1000 D Net profit to be overstated by R1000 4.3 Which of the following will constitute a line item in a close corporation’s statement of members’ net investment? A Member’s contributions B Revaluation surplus / reserve C Loans from members D Current accountsdetermine the following d. bad debts expense Prepare a function of expense SCI. Additional information:a. Depreciation of P5,000 is for computer equipment used in the administrativeb. Amortization is attributed to office leasehold improvements.c. 40% of salaries are attributed to sales personnel.d. Utilities for the store represent 35% of utilities expense.e. Rent for the office space is P20,000.
- 1. Identify the differences of Full PFRS from SMEs PFRS. Explain 2. Give at least 10 business transaction using full PFRS and SMEs PFRS and identifiable nature of business why you considered them to be using SMEs PFRS? 3. In cases of change in accounting policies on reporting, what would be your steps on the issue? 4. Using Full PFRS instead of SME’s PFRS in a business supposed to used SME’s PFRS was there a material effect on the presentations of financial position and financial operation? How? 5. Explain how many entities at present, outside the financial statements, reports and statements such as environmental reports and value-added statements, particularly in industries in which environmental factors are significant and when employees are regarded as an important user group where these reports and statements presented outside financial statements should be accounted for using applicable PFRS?Entity A enters into the following transactions. You are required to show the impact of the transactionsbelow on the accounting equation.1. In an attempt to assist the business, the owner of Entity A deposited R100 000 into the entity’sbank account. A quarter of the amount is payable to the owner and the rest is not.2. A client of Entity A who currently owes the company R23 000, purchased bricks to the value ofR45 000 and paid R35 000 to reduce his outstanding balance. Entity A purchased the bricks forR18 000.3. Entity A purchased 1 000 bags of cement from K Ltd on credit. K Ltd normally sells a bag for R45.Entity A received a 10% discount for the 1 000 bags.4. Entity A returned 150 bags of cement, as they were defective. On the same day, the outstandingbalance was settled through an online payment. This transaction did not affect the discountoffered to Entity A.Listed below are the current Accounting Assumptions and Principles Economic Entity Assumption Monetary Unit Assumption Historical Cost Principle Going Concern Assumption Revenue Recognition Principle Full Disclosure Principle Time Period Assumption Matching Principle Required: For the following situations, identify whether the situation represents a violation or a correct application of GAAP, and which assumption/principle is applicable. h. Nixon Corp records and maintains their books at cost and/or current value, not at a liquidated value. Violation: (Yes/No) Applicable Assumption/Principle: i. Wages of $4,000 related to the last two days of July, were recorded as expense in July even though they were paid in August. Violation: (Yes/No) Applicable…
