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CPA 3

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14 views

CPA 3

Uploaded by

nicholasm456123
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Class Preparation Assignment (CPA)

ACC1010 – Accounting Principles


Chapter 2 – Recording Business Transactions

CPA #3

READ: Pages 74 - 85

QUESTIONS:

1. Review the t-accounts on page 74.


a. I reviewed them.

2. The four-column account is used in place of t-accounts. It uses four columns for
debits and credits. The first two columns are used to post the transaction amount
from the journal. What are the second two columns used for?
a. The second two columns are used for determining the running balance of
the account.

3. What is a trial balance?


a. A trial balance is a list of all ledger accounts with their balances at a point
in time.

4. When is a trial balance prepared?


a. A trial balance is prepared at the end of the period when all transactions
are recorded in the journal and then posted to the ledger.

5. Review the trial balance (Exhibit 2-10) on page 77.


a. I reviewed the Trial Balance.

6. What is used to prepare the financial statements?


a. The trial balance is used to prepare the financial statements. The account
balances are taken directly from the trial balance and are used to prepare
the income statement, statement of owner’s equity, and balance sheet.

7. Review the financial statements (Exhibit 2-11) on page 78. Notice how the net
income is used in the preparation of the Statement of Owner’s Equity. Also,
notice how the capital balance is used in the preparation of the Balance Sheet.
a. I reviewed the financial statement and noticed the above.

8. If the trial balance does not balance, there are three ways to detect errors.
Describe one of the methods.
a. One way to detect an error in the trial balance is to search the trial balance
for a missing account. If you miss an account, debits will not equal credits.
If you do miss an account, trace each account from the ledger to the trial
balance, and you will find the missing account.
9. How is the debt ratio calculated?
a. The debt ratio is calculated by dividing total liabilities by total assets.

10. What does the debt ratio measure?


a. The debt ratio measures the proportion of assets financed with debt. It can
be used to evaluate a business’s ability to pay its debts.

11. Read the review section on pages 81-82.


a. I read the review section.

12. Review the summary problem on pages 82-85.


a. I reviewed the summary problem.

PROBLEMS:

1. Answer the multiple-choice questions on pages 86-87. Check your answers on


page 114.
a. A
b. C
c. D
d. D
e. B
f. B
g. D
h. B
i. A
j. B

2.Prepare the journal entries for Vito York, M.D.


a. On Journal Paper
Homework Problem

Journalizing transactions, posting journal entries to T-accounts, and preparing a


trial balance
Cash Balance $70,020

Vito York practices medicine under the business title Vito York, M.D. During March, the
medical practice completed the following transactions:
The business uses the following accounts: Cash; Accounts Receivable; Office Supplies;
Land; Accounts Payable; Advertising Payable; Unearned Revenue; Notes Payable; York,
Capital; York, Withdrawals; Service Revenue; Salaries Expense; Rent Expense; Utilities
Expense; and Advertising Expense.

Requirements
1. Journalize each transaction. Explanations are not required.
2. Post the journal entries to the T-accounts, using transaction dates as posting
references in the ledger accounts. Label the balance of each account Bal.
3. Prepare the trial balance of Vito York, M.D., as of March 31, 2017.

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