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Financial statements The following is an excerpt from a telephone conversation between Ben Simpson, president of Main Street Co., and Tami Lundgren, owner of Reliable Employment Co.: Ben: Tami, you're going to have to do a better job of finding me a new computer programmer. That last guy was great at programming, but he didn't have any common sense. Tami: What do you mean? The guy had a master's degree with straight A's. Ben: Yes, well, last month he developed a new financial reporting system. He said we could do away with manually preparing an end-of-period spreadsheet and financial statements. The computer would automatically generate our financial statements with “a push of a button.” Tami: So what's the big deal? Sounds to me like it would save you time and effort. Ben: Right! The balance sheet showed a minus for supplies! Tami: Minus supplies? How can that be? Ben: That's what I asked. Tami: So, what did he say? Ben: Well, after he checked the program, he said that it must be right. The minuses were greater than the pluses.... Tami: Didn't he know that Supplies can't have a credit balance—it must have a debit balance? Ben: He asked me what a debit and credit were. Tami: I see your point. 1. Comment on (a) the desirability of computerizing Main Street Co.'s financial reporting system, (b) the elimination of the end-of-period spreadsheet in a computerized accounting system, and (c) the computer programmer's lack of accounting knowledge. 2. Explain to the programmer why Supplies could not have a credit balance.

BuyFind

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285743615
BuyFind

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285743615

Solutions

Chapter
Section
Chapter 4, Problem 4.2CP
Textbook Problem

Financial statements

The following is an excerpt from a telephone conversation between Ben Simpson, president of Main Street Co., and Tami Lundgren, owner of Reliable Employment Co.:

Ben: Tami, you're going to have to do a better job of finding me a new computer programmer. That last guy was great at programming, but he didn't have any common sense.

Tami: What do you mean? The guy had a master's degree with straight A's.

Ben: Yes, well, last month he developed a new financial reporting system. He said we could do away with manually preparing an end-of-period spreadsheet and financial statements. The computer would automatically generate our financial statements with “a push of a button.”

Tami: So what's the big deal? Sounds to me like it would save you time and effort.

Ben: Right! The balance sheet showed a minus for supplies!

Tami: Minus supplies? How can that be?

Ben: That's what I asked.

Tami: So, what did he say?

Ben: Well, after he checked the program, he said that it must be right. The minuses were greater than the pluses....

Tami: Didn't he know that Supplies can't have a credit balance—it must have a debit balance?

Ben: He asked me what a debit and credit were.

Tami: I see your point.

1.    Comment on (a) the desirability of computerizing Main Street Co.'s financial reporting system, (b) the elimination of the end-of-period spreadsheet in a computerized accounting system, and (c) the computer programmer's lack of accounting knowledge.

2.    Explain to the programmer why Supplies could not have a credit balance.

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Chapter 4 Solutions

Accounting (Text Only)
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Ch. 4 - Flow of accounts into financial statements The...Ch. 4 - Flow of accounts into financial statements The...Ch. 4 - Statement of owner's equity Marcie Davies owns and...Ch. 4 - Statement of owners equity Blake Knudson owns and...Ch. 4 - Classified balance sheet The following accounts...Ch. 4 - Classified balance sheet The following accounts...Ch. 4 - Closing entries After the accounts have been...Ch. 4 - Closing entries After the accounts have been...Ch. 4 - Accounting cycle From the following list of steps...Ch. 4 - Accounting cycle From the following list of steps...Ch. 4 - Working capital and current ratio Balance sheet...Ch. 4 - Working capital and current ratio Balance sheet...Ch. 4 - Flow of accounts into financial statements The...Ch. 4 - Classifying accounts Balances for each of the...Ch. 4 - Financial statements from the end-of-period...Ch. 4 - Financial statements from the end-of-period...Ch. 4 - Income statement The following account balances...Ch. 4 - Income statement; net loss The following revenue...Ch. 4 - Income statement FedEx Corporation had the...Ch. 4 - Statement of owner's equity Apex Systems Co....Ch. 4 - Statement of owners equity; net loss Selected...Ch. 4 - Classifying assets Identify each of the following...Ch. 4 - Balance sheet classification At the balance sheet...Ch. 4 - Balance sheet Optimum Weight Loss Co. offers...Ch. 4 - Balance sheet List the errors you find in the...Ch. 4 - Identifying accounts to be closed From the list...Ch. 4 - Closing entries Prior to its closing, Income...Ch. 4 - Closing entries with net income After all revenue...Ch. 4 - Closing entries with net loss Mira Services Co....Ch. 4 - Identifying permanent accounts Which of the...Ch. 4 - Post-closing trial balance An accountant prepared...Ch. 4 - Steps in the accounting cycle Rearrange the...Ch. 4 - Working capital and current ratio The following...Ch. 4 - Working capital and current ratio The following...Ch. 4 - Completing an end-of-period spreadsheet List (a)...Ch. 4 - Adjustment data on an end-of-period spreadsheet...Ch. 4 - Appendix Completing an end-of-period spreadsheet...Ch. 4 - Appendix Completing an end-of-period spreadsheet...Ch. 4 - Appendix Adjustment data on an end-of-period...Ch. 4 - Appendix Completing an end-of-period spreadsheet...Ch. 4 - Financial statements and closing entries Lamp...Ch. 4 - Financial statements and closing entries Finders...Ch. 4 - T accounts, adjusting entries, financial...Ch. 4 - Ledger accounts, adjusting entries, financial...Ch. 4 - Complete accounting cycle For the past several...Ch. 4 - Financial statements and closing entries Last...Ch. 4 - Financial statements and closing entries The...Ch. 4 - T accounts, adjusting entries, financial...Ch. 4 - Ledger accounts, adjusting entries, financial...Ch. 4 - Complete accounting cycle For the past several...Ch. 4 - The unadjusted trial balance of PS Music as of...Ch. 4 - Kelly Pitney began her consulting business, Kelly...Ch. 4 - Ethics and professional conduct in business...Ch. 4 - Financial statements The following is an excerpt...Ch. 4 - Financial statements Assume that you recently...

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