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Solution Manual For College Accounting 22nd Edition
Solution Manual For College Accounting 22nd Edition
CHAPTER 2
REVIEW QUESTIONS
1. It is necessary to distinguish between business assets and liabilities and nonbusiness assets and
liabilities of a single proprietor because, according to the business entity concept, nonbusiness
assets and liabilities are not included in the business entity’s accounting records. These distinctions
allow the owner to make decisions based on the financial condition and results of the business apart
from nonbusiness activities.
2. The six major elements of the accounting equation are listed below.
a. Assets are items owned by a business that will provide future benefits.
b. Liabilities are items owed to another business.
c. Owner’s equity is the amount by which the business assets exceed the business liabilities. Other
terms used for owner’s equity include net worth and capital.
d. Revenues represent the amount a business charges customers for products sold or services
performed.
e. Expenses represent the decrease in assets (or increase in liabilities) as a result of efforts made to
produce revenues.
f. Withdrawals, or drawing, reduce owner’s equity as a result of the owner taking cash or other
assets out of the business for personal use.
3. The three basic questions that must be answered when analyzing the effects of a business
transaction on the accounting equation are as follows:
a. What happened?
b. Which accounts are affected?
c. How is the accounting equation affected?
4. The function of an income statement is to report the profitability of business operations for a specific
period of time.
5. The function of a statement of owner’s equity is to report the investments and withdrawals by the
owner and the profits and losses generated through operating activities for a specific period of time.
6. The function of a balance sheet is to report the assets, liabilities, and owner’s equity on a specific
date. It is called a balance sheet because it confirms that the accounting equation is in balance.
7. The three basic phases of the accounting process are listed below.
Input—Business transactions are used as input to the accounting process.
Processing—The transactions are processed by recognizing their effects on assets, liabilities,
owner’s equity, revenues, and expenses.
Output—Output from the accounting process is provided in the form of financial statements.
Exercise 2-1A
Exercise 2-2A
Exercise 2-3A
(c) (1,600)
1,600
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of the woman person in his hand—and he understood her a little. He
learned something of her strength, alien as it was to any strength he had
known. And he thought: I have lost my loggers; for neither history,
invention, industry nor oratory can prevail with them against this woman
person.
Gently Paul Bunyan put her on the ground. The woman person’s walk
was like a dance as she left him. In the door of her bright bunkhouse she
turned and blew him a kiss. And was gone. Paul Bunyan waved his hand.
The gesture was not for the woman person; it was a farewell to his loggers.
Paul Bunyan spoke no more; but he returned to his camp at once,
taking the blue ox with him over the mountains. He told his remaining men
of the women folk and let them go. Soon or late he would lose them, and he
let them go now, that they might not be held too long from their desire....
The sinking sun flashed its last blaze of red over a camp that was
deserted of all save the great heroes and the mighty blue ox. The Big Swede
had returned and he slept; Johnny Inkslinger figured; and Babe mooed
dolorously as the shadows clouded the silent timber. And Paul Bunyan, the
supreme inventor, the noble historian, the master orator, the grand field
marshal of industry, mused in sad resignation on the vanity of man’s
enterprises. The logging industry, which he had invented, would go on as
long as trees grew from the earth, and his name would be heard forever on
the tongues of men. He would have power, but it would be only the power
of a vast spirit breathing in the dark, deep woods. He would have the glory
he had dreamed about in his beginnings ... but glory was a poor consolation
... his life work was done....
The shadows got dense ... the shapes of the heroes, and the shape of
Babe, the blue ox, and the shapes of buildings, mountains and trees merged
in the darkness. And there history leaves them.
Transcriber’s Notes
Punctuation and hyphenation were made consistent when
a predominant preference was found in the original book;
otherwise they were not changed.
Simple typographical and spelling errors were corrected;
unbalanced quotation marks were remedied when the change
was obvious, and otherwise left unbalanced.
Illustrations in this eBook have been positioned between
paragraphs and outside quotations. In versions of this eBook
that support hyperlinks, the page references in the List of
Illustrations lead to the corresponding illustrations.
Page 83: “wreck” was printed that way.
Page 186: “Pugent Sound” was printed that way.
Page 209: “vigorously he in every action” was printed that
way.
*** END OF THE PROJECT GUTENBERG EBOOK PAUL BUNYAN
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