FINANCIAL ACCOUNTING: TOOLS FOR BUSINES
9th Edition
ISBN: 9781119595649
Author: Kimmel
Publisher: WILEY
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A business has the following items in it:
- Owner's equity: 1 200 000
- Total liabilities 2 800 000
Assets?
What is the value of assets in this business?
a) 300 000
b) 400 000
c) 1 600 000
d) 4 000 000
e) none of the above
Manor Ltd. records their business transactions into the basic accounting equation.
For each of the following independent business activities, indicate the effect on the basic accounting equation.
Signed a contract with a new customer to provide $6,000 of services in the future.
A. Increase assets, decrease assets
B. Increase assets, decrease liabilities
C. Increase assets, increase liabilities
D. Increase assets, increase equity
E. Increase assets, decrease equity
F. Increase liabilities, increase equity
G. Increase liabilities, decrease equity
H. Decrease liabilities, increase equity
I. Decrease liabilities, decrease equity
J. Decrease assets, decrease liabilities
K. Decrease assets, increase liabilities
L. Decrease assets, increase equity
M. Decrease assets, decrease equity
N. No entry is required.
Enter the correct LETTER choice (A B C D E F G H I J K L M N )
Purchase $800 of office supplies on account.
A. Increase assets, decrease assets
B.…
Describe a transaction that would: a. Increase both an asset and a liability. b. Increase one asset and decrease another asset. c. Decrease both a liability and an asset. d. Increase both an asset and retained earnings. e. Decrease both an asset and retained earnings. Identify whether the following group of people belongs to internal or external users of annual reports for a company. Eexplain their need for financial information. a. Johari, investment banker of CIMB Investment Bank.b. Daisy Ong, purchasing manager of the company. c. Happy Berhad, supplier of the company. d. Great Sdn Bhd, regular customer of the company.e. Amy, officer from Inland Revenue Board.Eng Hardwares has the following balance as at 30 November 2020: Accounts RM’000 Wages(Debit) 110,000 Insurance (Debit) 2,000 Rental (Credit) 50,000 Additional information: i. Eng Hardwares pays wages to its workers at the end of every month. However, some internal problems arise and it did not pay wages amounting to RM10,000 to…
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- Accounting concepts Match each of the following statements with the appropriate accounting concept. Sonic concepts may he used more than once, while others may not be used at all. Use the notat ions shown to indicate the appropriate accounting concept. Statements 1. Assume that a business will continue forever. 2. Material litigation involving the corporation is described in a note. 3. Monthly utilities costs are reported as expenses along with the monthly revenues. 4. Personal transactions of owners are kept separate from the business. 5. This concept supports relying on an independent actuary (statistician), rather than the chief operating officer of the coq)ration, to estimate a pension liability. 6. Changes in the use of accounting methods from one period to the next are described in the notes to the financial statements. 7. Land worth $800,000 is reported at its original purchase price of $220,000. 8. This concept justifies recording only transactions that are expressed in dollars. 9. If this concept was ignored, the confidence of users in the financial statements could not be maintained. 10. The changes in financial condition are reported at the end of the month.arrow_forwardQuestion 1Identify whether the following group of people belongs to internal or external users ofannual reports for a company. Eexplain their need for financial information.a. Johari, investment banker of CIMB Investment Bank.b. Daisy Ong, purchasing manager of the company.c. Happy Berhad, supplier of the company.d. Great Sdn Bhd, regular customer of the company.e. Amy, officer from Inland Revenue Board.arrow_forward26 Assume that the total assets, liabilities, Equity of the firm are OMR 40000, OMR 10000 and OMR 30000 respectively.The company sold OMR 3000 furniture for its customer and received notes receivables for OMR 4500. What is the effect of the above transaction on different elements of financial position of the company? a. Assets of the company increase by OMR 4500 and capital of the company increase by OMR 4500 b. Assets of the company decrease by OMR 3000 and capital of the company decrease by OMR 3000 c. None of the given options d. Assets of the company increase by OMR 1500 and capital of the company increase by OMR 1500 Clear my choice ◀︎ Practice problems on chapter -5 and 6arrow_forward
- Show how the below transactions affect the financial position of the business as represented by A = E + L. You need to clearly indicate whether the element has increased or decreased and provide the relevant amount and account that would be affected.EG. The business pays R6 333 per month for the rental of some business premises. All rentals were paid in cash during the year. No. A = E + L Eg. -75996 Bank (6333 x 12) - 75996 Rent Expense Please use format of table above for the below transactionsThe following transactions occurred in the business during the year ended 31 December 2020: 1. The owner deposited R105 000 cash into the business’s bank account on 1 January 2020.2. The business bought R450 000 worth of inventory from various suppliers during the year. 80% of these purchases were on credit and the remaining 20% were paid for in cash.3. During the year the business paid R96 900 cash in operating costs. These costs related to goods and services that had all been…arrow_forwardEntity 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.arrow_forwardFor each of the following descriptions choose the correct term: (a)A company that raises money by issuing shares(b)An accepted set of accounting standards that includes broad principles, procedures, and concepts(c)Obligations to suppliers of goods(d)Amounts due from customers(e)Owner's claims against the residual company's resources(f)Payment of cash for costs incurred in advance of being used(g)A party that a company owes money to(h) Resources owned by a business that have the potential to provide economic benefit (i)The set of accounting standards that all publicly traded enterprises in Canada must follow(j)Results when revenues exceed expenses(k)The cost of assets consumed or services used in a company's ordinary business activities(L)A liability arising when a customer pays in advance of receiving service terms: Owner's Equity, corporation, Generally Accepted Accounting Principles (GAAP), Assets,International Financial Reporting Standards (IFRS),Prepaid Expense,Accounts…arrow_forward
- While you analyze the financial statements of a Company, you notice that it has investedA major part of the Profits outside the Business in the form of Long Term / Short Term FinancialInstruments.a) What does this indicate b) Discuss 2 benefits of this for the investing company c) Discuss 2 negative points of such a method for the investing company Explain Briefly and Fast Pleasearrow_forwardEnter 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.arrow_forwardHh1. Account Choose the stakeholder that is MOST likely to ask the following question. Will the business be able to pay for its purchases on time? Select one: a. Canada Revenue Agency management of a retailer b. c. business owner d. lender (e.g. banker) e. supplier (e.g. a wholesaler) f ou morarrow_forward
- Which of the following is true about financial accounting? It provides information to investors and creditors on the whole company. It reports detailed information for segments of the company. It provides detailed reports as needed. It provides guarantees required that the company will be able to pay debt. Flag this Question Question 2 4 pts A service company has: no inventory account one inventory account two inventory accounts three inventory accounts Flag this Question Question 3 4 pts Which of the following is most likely a merchandising company? a real estate office an accounting office a shoe store a custom home builder Flag this Question Question 4 4 pts Which of the following would appear on the balance sheet of a merchandiser but not on the balance sheet of a service company? cost of goods sold merchandise inventory gross profit work in process inventory Flag this Question Question 5 4 pts Our company is a manufacturer and has the following data available for the current year:…arrow_forwardFor each transaction a through f, identify its impact on the accounting equation (select from 1 through 5 below). a. The company pays cash toward an account payable. b. The company purchases equipment on credit. c. The owner invests cash in the business. d. The owner withdraws cash from the business. e. The company purchases supplies for cash. f. The company provides services for cash. 1. Decreases an asset and decreases equity. 2. Increases an asset and increases a liability. 3. Decreases an asset and decreases a liability. 4. Increases an asset and decreases an asset. 5. Increases an asset and increases equity.arrow_forward1. A business has the following items in it: - Land 2 000 000 - Machinery 40 000 - Cash 20 000 - Owner's equity 1 000 000 - Debt? What is the value of debt and how is it calculated A) 1 060 000 b) 3 060 000 C) 840 000 D) 1 010 000 (please show how you got the answer) 2. A business has the following items in it: - Land 500 000 - Machinery 40 000 - Cash 60 000 - Loan? - Owner's equity 250 000 What is the value of the loan? A) 350 000 B) 850 000 C) 1 000 000 D) 1 030 000 3. A business has the following items in it: - Owner's equity: 1 200 000 - Total liabilities 2 800 000 Assets? What is the value of assets in this business? a) 300 000 b) 400 000 c) 1 600 000 d) 4 000 000 e) none of the above 4. A business has the following in it: - Land 750 000 - Machinery 40 000 - Cash 10 000 - Owner's equity 450 000 - Loan 250 000 - Creditors? What is the value of the creditors? A) 100 000 B) 7 00 000 C) 900 000 D) 1500 000arrow_forward
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