Concept explainers
Concept Introduction:
Accounting is an art of recording, classifying, analyzing and summarizing the financial statement to produce meaningful information and reports.
Accounting is done with two methods as follows:
Cash Basis accounting:
Under the cash basis accounting all the cash receipts for the period are considered as revenue and all the cash payments for the period are considered as expenses and net income us calculated.
Accrual Basis accounting:
Under the accrual basis, the revenue and expenses are recorded accreting to their accrual for the given period and cash receipts and payments are not considered to decide their accrual. The net income is calculated using the accrued revenue and accrued expenses belonging to the particular period.
To Discuss:
The Validity of the statement
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Survey of Accounting (Accounting I)
- On September 1, Pat Hopkins established On a Cloud Corporation (OCC) as a provider of cloud computing services. Pat contributed $14,000 for 1,400 shares of OCC. On September 8, OCC borrowed $34,500 from a bank, promising to repay the bank in two years. On September 10, OCC wrote a check for $25,500 to acquire computer equipment. On September 15, OCC received $1,100 of supplies purchased on account and, on September 16, paid $2,450 for September rent. Through September 22, OCC billed its customers for $12,250 of services, of which OCC collected $6,450 in cash. On September 28, OCC paid $555 for Internet and phone service this month. On September 29, OCC paid wages of $4,300 for the month. Finally, on September 30, OCC submitted its electricity meter reading online and determined that the total charges for the month will be $790. This amount will be paid on October 14 through a preauthorized online payment. 1. Indicate the accounting equation effects of the September events using a table…arrow_forwardMr. Naveed decided to start a courier service Business in Ibra that named as Courier delivery service. On 1st January 2021, he invested OR. 90,000 cash in the business. 3rd January. The business purchased furniture worth OR. 4,000 and paid cash. 10th January. The business purchased office supplies worth RO.4, 000 from Musana Traders LLC and paid cash OR.1000, and agreed to pay balance after one month. 15th January. The business performed a service to a customer and receives OR. 1,800 cash. 25th January. The business paid salaries to employees totalled OR.1, 200 30th January. Mr. Nasser withdraw cash of OMR 400 from the business for his personal use. You are required to show the effect of above transactions on accounting equation and prove the accounting equation at the endarrow_forwardDuring January 2020 Orgonite Wellness Clinic completed the following transactions : Jan 1 Orgonite received $ 50,000 cash and issued common shares to shareholders 4 Purchased supplies , $ 5,000 , and equipment , $ 2,500 on account 5 Performed checkup services , and received cash , $ 2,500 7 Paid cash to acquire land for an office site , $ 25,000 11 Performed a therapy session , and billed the customer $ 2500 16 Paid for the equipment , purchased Oct 4 on account 17 Paid the telephone bill , $ 150 18 Received partial payment from client on account , $ 2000 22 Paid the water and electricity bills , $ 500 29 Received $ 5,000 cash for conducting a workshop on " Healthy Living " 31 Paid employee salary , $ 4,000 31 Declared and paid dividends of $ 4,500 Requirements : Record each transaction in the journal . Key each transaction by date . Prepare the trial balance of Orgonite , at Jan 31 , 2020 .arrow_forward
- Davis & Bell began a health clinic as a corporation in 2014. Several transactions which occurred early in 2014 are described below. Record each transaction in proper journal entry form, excluding written explanations. Required: 5 points each Record each transaction in proper journal entry form, excluding written explanations. 1/15/14-Stockholders invested $90,000 in the business and received shares of common stock as evidence of ownership. 2/1/14 --Rent of $2,000 was paid for the month of February 2/10/14--Equipment with a cost of $10,000 was purchased on credit; payment is due in 30 days. 2/14/14--Fees totaling $5,500 were billed to patients; $3,000 was collected immediately and the balance of $2,500 is due within 30 days. 2/19/14--Full payment was made for the equipment purchased on…arrow_forwardI am going to name a couple of statements and terms. I need to know if they are Proprietorship, Partnership, or Corporation.1) Bronson Company presents a statement of retained earnings in its financial statements at year end2)Jean Johnson's home health care business doesn't have liability separate from herself3)Grand Canyon Company's Retained Earnings balance is 5 million4)Michael Johnson and Joaquin Nunoz each invested $10,000 in their computer consulting business, and received shares of the company's stock in exchange for their investments5)Crown Candy Company presents statement of owner's capital in its annual financial statement.6)Johnson, Capital7) Common Stock8) Statement of capital containing two capital accounts9) Par Value10) Stockholder's Equity11) Partners' Capital, December 3112) Statement of capital containing one capital account13) Retained Earnings14) Jones, Drawings15) Additional Paid-in-Capitalarrow_forwardThe following business transactions relate to John Clark (financial planner) for his first month of business operations in August 2020. 2020 August1:Commenced business operations with a $300 000 cash injection of personal funds. 2 Paid monthly rent $1500. 4Purchased office stationery $2000 on credit from Stationery Plus. 7Purchased office equipment on credit from Supplies Inc. $10 000. 9Sent invoice to client M Birt for services $3000. 11 Purchased MYOB software for laptop computer $700 cash. 13 M Birt paid amount outstanding. 14 Met with prospective client and negotiated provision of financial advice for client and family, quoting $5000. 17 Paid car parking permit $220. 19 Withdrew cash from business of $2000 for personal use. 22Paid WWW Ltd for monthly internet use $182. 29 Received interest from business bank account $15. Required: A. State the impact on the accounting equation for each transaction above. For example: 1 Aug Increased Cash $300,000…arrow_forward
- Mahendra started a business on 1 November 20–7. He provided the following information for his first month of trading: Nov 1 Introduced $160 000 capital into the business, of which $158 500 was transferred into a business bank account and the rest was placed in the business cash box2 Purchased premises, $95 000, paying by credit transfer5 Bought goods for resale, $2 600, on credit from Duleep10 Returned goods, $150, to Duleep14 Paid general expenses in cash, $27519 Paid rates in cash, $39521 Sold goods on credit to Anila, $124 Paid carriage on good sold, $95, in cash24 Paid Duleep $1 000 by cheque on account28 Took goods costing $250 for personal use30 Rented out part of the premises and received $260 rent by cheque a. Enter these transactions in the cash book and ledgers. Balance the cash book and Duleep’s account. Bring down the balances on 1 December 20–7. b. Prepare a trial balance on 30 November 20–7.Mahendra is considering allowing credit customers a cash discount for prompt…arrow_forwardThe following business transactions of Mrs.Emma Blake, a sole trader. May 2021 (1) Capital invested as cash RO 80,000 to start up the business (5) Paid RO 24000 in cash to Purchase Factory (7) Purchase of goods on credit for RO 30000 and 34500 on cash from Kalood trading (8) Sale of goods RO 39700 on credit to Qaboos trading and for cash RO 45400 (9) Paid RO 26800 liability to the Kalood trading (11) Paid advertisement of RO 3570 (17) Paid salaries of RO 2530 (16) Paid rent RO 375 for the house of the sole trader (28) Collection of accounts receivable RO 27950 from Qaboostrading My question is, what will the following answers to the questions below? a. Journal entries b. Post ledger accounts c. Trail balancesarrow_forwardOn April 5, Timothy established an interior decorating business, Tim’s Design, with a cash investment ofP200,000. Timothy completed the following transactions for April:6 Paid rent for the month, P8,000.7 Purchased from Delta Co. office equipment, P55,0008 Purchased a used car for P180,000, paying P80,000 cash and taking a bank loan for theremainder.10 Purchased supplies and materials for cash, P11,315.12 Received cash from Miss Laura for job completed in her condo, P57,500. Supplies were used upamounting to P8,250.20 Purchased materials and supplies on credit, P15,000.23 Recorded job completed for Ms. Ferrer. Term: on account 10 days, P14,950. Supplies were usedup amounting to P3,500.24 Received an invoice for repairs on car and paid P4,500.25 Paid utilities expense, P1,750.26 Paid P20,000 on the bank loan.27 Received cash from Ms. Ferrer, P10,000.28 Paid salary of worker, P5,00029 Paid Delta a portion of the amount owed for equipment, P5,000.30 Withdrew cash for personal use, P3,500.…arrow_forward
- On April 5, Timothy established an interior decorating business, Tim’s Design, with a cash investment ofP200,000. Timothy completed the following transactions for April:6 Paid rent for the month, P8,000.7 Purchased from Delta Co. office equipment, P55,0008 Purchased a used car for P180,000, paying P80,000 cash and taking a bank loan for theremainder.10 Purchased supplies and materials for cash, P11,315.12 Received cash from Miss Laura for job completed in her condo, P57,500. Supplies were used upamounting to P8,250.20 Purchased materials and supplies on credit, P15,000.23 Recorded job completed for Ms. Ferrer. Term: on account 10 days, P14,950. Supplies were usedup amounting to P3,500.24 Received an invoice for repairs on car and paid P4,500.25 Paid utilities expense, P1,750.26 Paid P20,000 on the bank loan.27 Received cash from Ms. Ferrer, P10,000.28 Paid salary of worker, P5,00029 Paid Delta a portion of the amount owed for equipment, P5,000.30 Withdrew cash for personal use, P3,500.…arrow_forwardVince York practices medicine under the business title Vince York, M.D. During July, the medical practice completed the following transactions: Jul. 1 York contributed $63,000 cash to the business in exchange for common stock. 5 Paid monthly rent on medical equipment, $510. 9 Paid $23,000 cash to purchase land to be used in operations. 10 Purchased office supplies on account, $1,600. 19 Borrowed $22,000 from the bank for business use. 22 Paid $1,100 on account. 28 The business received a bill for advertising in the daily newspaper to be paid in August, $240. 31 Revenues earned during the month included $6,400 cash and $6,000 on account. 31 Paid employees’ salaries $2,200, office rent $1,900, and utilities $560. Record as a compound entry. 31 The business received $1,120 for medical screening services to be performed next month. 31 Paid cash dividends of $7,200. The business uses the following accounts: Cash;…arrow_forwardAccounting Concepts Record the effect of the following transactions on the accounting equation using atable similar to the example (page 18).a. Owen inherited $20,000 and invested the cash in the business.b. Performed services for a client and received cash of $700.c. Purchased supplies on account, $1,000d. Invested personal cash of $1,000 in the business.e. Performed services to clients and received cash of $2,400f. Paid office rent expenses, $ 900 and advertising expense $100.g. Withdrew cash of $1,800 for personal use. Prepare Income Statement and Balance Sheet.arrow_forward
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning