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Question Chapter2 Final 1
Question Chapter2 Final 1
Q1
Indicate by use of the above letters how each of the following items would be classified on a statement of financial position prepared at
st
December 31 , 2019. If a contra account, or any amount that is negative or opposite the normal balance, put parentheses around the letter
5. Cash
13. Goodwill:
1
17. Trade accounts payable
20. Copyright
Q2
1- Let’s have a look at a business where capital at the end of 2019 was $20,000. During 2020, there have been no drawings, and no
contributions from the owner. At the end of 2020, the capital was $30,000.
Required:
b. Determine net income (loss) for business for year 2020 if drawings had been $7,000.
st
2- ABCcompany has got following information on 3 Quarter of 2019 .Unit: $
1/7/2019 30/9/2019
rd
During 3 Quarter of 2019, owner withdrew by cash $300 and no contribution.
Determine:
rd
A - Changes of the owner’s equity during 3 Quarter of 2019.
rd
B - Net income (net loss) for 3 Quarter of 2019?
st
3 – XYZ coporation has got following information on Quarter 1 , 2020
2
Openning balance Closing balance
st
During 1 Quarter of 2020, XYZ coporation issued shares and received cash of $1,000. Nodrawings.
st
Require: Determine net income (net loss)for business for 1 Quarter of 2020?
Q3
st
Lee started a business on 1 January 2002 with $35,000 in a bank account. Unfortunately, he did not keep proper books of account.
st st
He must submit a calculation of profit for the year ending 31 Dec 2002 to the inspector of Taxes. At 31 December 2002, he had inventory
valued at cost of $6,200, a van which had cost $6,400 during the year and which had depreciated during the year by $1,600, A/R of $15,200,
expense prepaid $310, a bank balance of $33,490, a cash balance $270, A/P $7,100 and expenses owing $640.
His drawings were: cash $400 per week for 50 weeks, cheque payment $870
Required:
Q4
Which of the following transactions meet the recognition criteria of FS’s elements?
3
other parties
...
Present
Reliable measurement Past transactions Recognized liability
Items/Transactions obligation
issued
3. Bonds/ debentures
4
7. Provision for warranty
Part C: Which items/transactions satisfy (income) revenue recognition according to accrual basis?
reclassification
2. Receipt in advance
on credit
Part D: Which items/transactions satisfy income recognition criteria in accordance with cash basis?
liabilities reclassification
2. Receipt in advance
advance
Part E: Which items/transactions satisfy expense recognition criteria in accordance with accrual basis?
5
Expense : matching revenue in the current period
Matching with
Reliable measure Equity decrease (indirect) Expense recognition
Items/transactions
current period
Distribution to owners
Welfare Fund..)
Part F: Which items/transactions satisfy expense recognition criteria in accordance with cash basis?
Fund, etc)
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Q5
Caren Smith Corporation, supplies a medical practice. During July 2020, the first month of operation, the business experienced the following
events:
Jul 6 Caren Smith received $55,000 cash from shareholders and issued common stock.
No recording
15-31 During the rest of the month, Caren Smith treated patients and earned service revenue $ 8,000, receiving cash.
29 Paid cash expense employees’ salaries, $1,600; office rent, $900, utilities, $100
th
30 Returned supplies purchased on the 12 for the cost of those supplies, $700
7
A/P (L) decreased 1.100
Required:
Analyze the effects of these events on the accounting equation of business of Caren Smith Corporation.
Q6
Indicate the effects of the following business transactions on the accounting equation of Video Store Corporation. Transaction (a) is answer as a
guide.
h. Paid $200 cash to purchase supplies that will be used in the future
Q7
Unit: $
8
b. Performed service for client and received cash of $900.
Required:
1. Analyze the effects of these events on the accounting equation of business of Hongha Corporation.
2. Prepare the following financial statements for the month ended 30 Sept 2013:
a. Income statement
b. Statement of RE
c. Balance sheet
Q8
1 31,000 31,000
2 3,800 3,800
3 13,400 13,400
4 190 - 190
5 - 410 - 410
6 - 8,000 - 8,000
7 - 1,500 - 1,500
9
Required:
Q9
On 1/1/Y, Company X signed a contract to supply products ordered by Company Y with the total contract value of $ 3,000 and received in
advance $1,000 by cash in bank. On 1/5/Y, Company X delivered finished goods to Company Y with total production cost was $2,500. After
finished goods were delivered, the remaining amount of the contract will be paid in the following period.
Required:
A/ How does X record for elements of financial statement if the accrual basis is applied?
B/ How does Y record for elements of financial statement if the accrual basis is applied?
Q10
th
On January 1/Year, Company P gave a loan of VND 500 million in two-year term and at 12%/year interest to Company Q. On January 4 , the
borrower prepaid the full interest of VND120 million in two years. On 1/04/Y + 1 the borrower paid the principal to Company P, the interest
received for the last 3 quarters of year (Y + 1) was repaid by the Company P by deducting from the principal.
A/ How does P’s accountant record for elements of financial statement if the accrual basis is applied and the accounting period is quarterly?
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- At the time of receiving the principal
B/ How does Q’s accountant record for elements of financial statement if the accrual basis is applied and the accounting period is quarterly?
Q11
In January/Y, A Company sold and handed over to B Company a batch of products for total VND 900 million and received by cash on hand
VND 500 million, the remaining amount will be received in May/Y. Free warranty service was provided for 02 years since the products were
delivered to customer. Based on historical data, the cost of warranty coverage was about 2% of revenue. Accordingly, A Company extracted a
product warranty amount for Jan/Y over of the products sold in this month which was VND 18 million.
A1- How does she/he record elements of financial statement if accrual basis is applied with the accounting period of month?
A2- How to record sales and expenses of January Y from the above events if the cash basis is applied?
A3-It is assumed that the accounting period is quarterly. In Q1/Y, A Company applied the money accounting method, quarter 2/Y changed to
accrual accounting and did not conduct retroaction. Whether sales of the above product batch were omitted or duplicated? how much?
B/ Company B’s Accountant: How to record the financial statement elements if accrual principle is applied with the accounting period of
month?
Accrual basic
A( seller) B( purchaser)
11
At the time of delivery goods and Increase OE( revenue) 900 Increase A( inventory) 900
At the time of the second payment Decrease A( A/R) 400 Decrease L (A/P) 400
cost- January
Provision for warranty ( L) increase 18
Q12
ABC Catering Company, completed the following selected transactions during May, 2019.
12
Decrease OE( rent expense) 500
Required
a. Indicate which accounts were increased or decreased and by what amounts from the transactions above, according the accrual basis
accounting.
b. Show whether each transaction would be handled as a revenue or an expense using both the accrual basic and cash basic by completing the
following table:
Date Cash basic amount of Revenue (Expense) Accrual basic amount of Revenue (Expense)
c. Calculate the amount of net income or net loss for ABC Catering Company under cash basic and accrual basis.
Q13
Quoc Viet Company completed the following transaction during June, 2020:
13
Increase OE (revenue) 2,300
14
Decrease A( depreciation accumulated) 25
Required
a. Indicate which accounts were increased or decreased and by what amounts from the transactions above, according the accrual basic
accounting.
b. Show whether each transaction would be handled as a revenue or an expense using both the accrual basic and cash basic by completing the
following table:
Date Cash basic amount of Revenue (Expense) Accrual basic amount of Revenue (Expense)
c. Calculate the amount of net income or net loss for Quoc Viet Company under cash basic and accrual basis.
tranthingocanh@hvtc.edu.vn
Q14
Tropical View Company applies accrual basic accounting. Consider the facts presented in the following table for the company:
Situation
A B C D
Required
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Q15
The following are changes in all account balances of XYZ Furniture Co. During the current year, except for retained earnings.
Increase (Decrease)
Cash $69,000
Inventory 127,000
Investments (47,000)
Required
Compute the net income for the current year, assuming that there were no entries in the RE account except for net income and a dividend
Q16
Case 1: Sales salaries paid during 2019 were €70,000. Sales salaries accrued were €1,360 on January 1, 2019, and €1,380 on December 31,
2019. Show the computation of sales salaries on an accrual basis for 2019.
Case 2:
The records for Todd Inc. showed the following for 2019:
Jan. 1 Dec. 31
Case 3:
The records for Kiley Company showed the following for 2019:
Jan. 1 Dec. 31
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Cash collected during the year for revenue, HK$75,000
Show the computation of the amount of revenue that should be reported on the income statement.
Case 4
The records for Kiley Company showed the following for 2019:
Jan. 1 Dec. 31
Show the computation of the amount of revenue that should be reported on the income statement.
Case 5
Revenue for the year on accrual basic was €135,800. Account receivable were €4,500 on January 1 and €3,540 on December 31.
REVIEW CHAPTER 2
Question 1
1. Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on the balance sheet and are referred to
as __________
2. Obligations (amounts owed) are reported on the balance sheet and are referred to as __________
3. Which of the following characteristics does not describe an asset? Requires the payment of cash or Controlled by an entity?
4. Which of the following characteristics does not describe a liability? Present obligation or must be legally enforceable?
7. If you are informed that your last insurance bill was overstated and that you will receive a credit, is your expense increasing or
decreasing
8. If you receive notification from the bank that you have been charged bank fees, is your asset (the bank account) increasing or decreasing?
Question 2
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1. The owner invested $30,000 cash in the corporation
Required: Prepare a tabular analysis which shows the effects of these transactions on the expanded accounting equation
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