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ACC 210 Lecture Notes - Lecture 2: General Ledger, Trial Balance, Accounting Equation

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School
NCSU
Department
Accounting
Course
ACC 210
Professor
Bruce C Branson

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Document Summary

Transactions- economic events that must be captured in the accounting info system. Only activities that can be measured in us dollars represent transactions. Assets, liabilities, or stockholders" equity items change as a result of these economic events. Each transaction must affect 2 or more accounts to keep in balance. Recording done by debiting at least 1 account and crediting another. If debits are greater than credits, the account has a debit balance. If credits are greater than debits, the account has a credit balance. Chapter two - the accounting cycle: during the period. The process of identifying the specific effects of economic events on the accounting. Fundamental accounting equation: assets = liabilities + stockholders" equity. Rely on a process referred to as the accounting cycle. Analyze business transactions: journalize - post - trial balance - adjusting entries - adjusted. Trial balance - financial statements - closing entries - post-closing trial balances. Investments by stockholders and revenues increase stockholders" equity (credit)

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Related Questions

QUESTION 1

Accounting is an information and measurement system thatidentifies, records, and communicates relevant, reliable, andcomparable information about an organization's businessactivities.
True
False

QUESTION 2

We use the accounting equation to identify what a company ownsand owes. The accounting equation is:
Assets = Liabilities + Equity
Assets = Liabilities – Equity
Assets = Liabilities + Revenues
Equity = Liabilities + Revenues
QUESTION 3

______ are beliefs that distinguish right from wrong. Thesebeliefs are accepted standards of gauging good and dishonestbehavior.
Accounting Standards
Ethics
Generally Accepted Accounting Principles
FASB
QUESTION 4

The _____ is a collection of all accounts within a company’saccounting system.
General Journal
Chart of Accounts
General Ledger
Balance Sheet
QUESTION 5

We use the accounting equation to identify what a company ownsand owes. _____ are resources a company owns or controls, _____ areclaims creditors have against a company’s assets, and _____ is theowner’s claim on a company’s assets.

QUESTION 6

In double entry accounting a credit to an asset account willrepresent an increase in the asset account balance; and a debitwill represent a decrease in the asset account balance.
True
False
QUESTION 7

The purchase of supplies on credit will ____ assets and ____liabilities.
Increase, decrease
Decrease, increase
Decrease, decrease
Increase, increase
QUESTION 8

During the accounting cycle, we analyze transactions toprepare statements.
True
False
QUESTION 9

The supplies account for a company has a $1,000 debit balanceat the beginning of the year. Supplies of $2,000 were purchasedduring the year and debited to the Supplies account. A December 31physical count shows $500 of supplies remaining at the end of theyear. Assume no other adjusting entries are made during the year.Using the 3-step process for creating adjusting entries, calculatethe adjustment amount for supplies (no journal entry isrequired).
$1,000 adjustment
$2,000 adjustment
$2,500 adjustment
$3,000 adjustment
QUESTION 10

During the accounting cycle, to complete step 7 youwould:
Prepare post-closing trial balance--Test clerical accuracy ofthe closing procedures.
Prepare adjusted trial balance--Summarize adjusted ledgeraccounts and amounts.
Prepare statements--Use adjusted trial balance to preparefinancial statements.
Close--Journalize and post entries to close temporaryaccounts.
QUESTION 11

The three financial statements that should be prepared duringthe accounting cycle are the:
Balance sheet, adjusted trial balance, income statement
Balance sheet, unadjusted trial balance, Statement of Owner’sEquity
Income statement, adjusted trial balance, Statement of Owner’sEquity
Balance sheet, Income statement, Statement of Owner’sEquity

QUESTION 12

An optional working paper, which is not a required report oran accounting record, but is used to prepare a company's unadjustedtrial balance, adjusting entries, adjusted trial balance, andfinancial statements is a(n):
Adjusted trial balance
Worksheet
Post-closing trial balance
Unadjusted trial balance
General ledger
QUESTION 13

The two goals for completing the closing process are:
To identify accounts for closing and record the closingentries
To journalize and post transactions
To post transactions and prepare post-closing trialbalance
To reset revenues, expenses, and withdrawal account balancesto zero at the end of each period, and help summarize an accountingperiod’s revenues and expenses.
QUESTION 14

Fill in the Blank: The _____ describes a company’s financialposition – by the types and amounts of assets, liabilities, andequity -- at a point in time.

QUESTION 15

Return on Assets is useful in evaluating management, analyzingand forecasting profits, and planning activities.
True
False

QUESTION 16

The Income Statement:
Identifies cash inflows (receipts) and cash outflows(payments) over a period-of-time.
Summarize adjusted ledger accounts and amounts
Describes a company’s revenues and expenses along with theresulting net income or net loss -- over a period-of-time due toearnings activities
Resets revenues, expenses, and withdrawal account balances tozero at the end of each period.
QUESTION 17

An internal control system consists of the policies andprocedures used to:
Protect assets and Ensure reliable accounting
Urge adherence to company policies and Promote efficientoperations
All of the above
None of the above.
QUESTION 18

The cost-benefit principle is the second limitation of_______.
Bank reconciliations
Petty cash controls
Voucher system of controls
Internal controls
QUESTION 19

The Unadjusted Trial Balance columns of a company's work sheetshows the Store Supplies account with a balance of $750. TheAdjustments columns shows a credit of $425 for supplies used duringthe period. The amount shown as Store Supplies in the Balance Sheetcolumns of the work sheet is:
$325 debit
$325 credit
$425 debit
$425 credit
QUESTION 20

A company shows a $600 balance in Prepaid Rent in theUnadjusted Trial Balance columns of the work sheet. The Adjustmentscolumns show expired rent of $200. This adjusting entry resultsin:
$200 decrease to net income
$200 increase to net income
$200 different between the debit and credit columns of theUnadjusted Trial Balance
An error in the Balance Sheet

QUESTION 21

This semester we have discussed four major financialstatements. List the 4 financial statements and describe them. Makesure to include how they flow together.

QUESTION 22

Explain the purpose of adjusting entries at the end of aperiod.

Please include the answer for the depreciation expense and accumulated depreciation. i noticed other posts with this similar questions didnt have the answer to those

Required: #1. Prepare journal entries to record the December transactions in the General Journal Tab in the excel template file "Accounting Cycle Excel Template.xlsx". Use the following accounts as appropriate: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Equipment, Accumulated Depreciation, Accounts Payable, Wages Payable, Common Stock, Retained Earnings, Dividends, Service Revenue, Depreciation Expense, Wages Expense, Supplies Expense, Rent Expense, and Insurance Expense.
1-Dec Began business by depositing $10500 in a bank account in the name of the company in exchange for
1050 shares of $10 per share common stock.
1-Dec Paid the rent for the current month, $1450 .
1-Dec Paid the premium on a one-year insurance policy, $1320 .
1-Dec Purchased Equipment for $4200 cash.
5-Dec Purchased office supplies from XYZ Company on account, $300 .
15-Dec Provided services to customers for $9200 cash.
16-Dec Provided service to customers ABC Inc. on account, $8200 .
21-Dec Received $3400 cash from ABC Inc., customer on account.
23-Dec Paid $170 to XYZ company for supplies purchased on account on December 5 .
28-Dec Paid wages for the period December 1 through December 28, $5040 .
30-Dec Declared and paid dividend to stockholders $200 .
#2. Post all of the December transactions from the “General Journal” tab to the T-accounts under the “T-Accounts” tab in the excel template file "Accounting Cycle Excel Template.xlsx". Assume there are no beginning balances in any of the accounts.
#3. Compute the balance for each T-account after all of the entries have been posted. These are the unadjusted balance as of December 31.
#4. Prepare the unadjusted trial balance under the “Unadjusted Trial Balance” tab in the excel template file "Accounting Cycle Excel Template.xlsx" .
Provide the total of the credit column from the Unadjusted Trial Balance
#5. Record the following four transactions as adjusting entries under the “General Journal” tab.
31-Dec One month’s insurance has been used by the company $110.
31-Dec The remaining inventory of unused office supplies is $90.
31-Dec The estimated depreciation on equipment is $70.
31-Dec Wages incurred from December 29 to December 31 but not yet paid or recorded total $540.
#6. Post all of the adjusting entries to the T-accounts under the “T-Accounts” tab. Compute the balance for each T-account after all of the adjusting entries have been posted. These are the adjusted balance as of December 31.
#7. Prepare the adjusted trial balance under the “Adjusted Trial Balance” tab as of December 31 in the excel template file "Accounting Cycle Excel Template.xlsx" .
Provide the following accounts balances from the Adjusted Trial Balance:
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accumulated Depreciation
Accounts Payable
Wages Payable
Common Stock
Retained Earnings
#8. Prepare Income Statement, Statement of Stockholder’s Equity, and Classified Balance Sheet under the “Financial Statements” tab for the month ended December 31, 20XX in the excel template file "Accounting Cycle Excel Template.xlsx".
Provide the following amount from the Income Statement:
Service Revenue
Depreciation Expense
Wages Expense
Supplies Expense
Rent Expense
Insurance Expense
Net Income
Provide the following account balance from the Statement of Stockholders' Equity:
Dividends
Provide the following account balances from the Balance Sheet:
Current Assets
Long-Term Assets
Total Liabilities
Total Stockholder’s Equity
Cash
#9. Record the closing entries under the “General Journal” tab.
#10. Post all of the closing entries to the T-accounts under the “T-Accounts” tab. Compute the balance for each T-account after all of the closing entries have been posted.
Provide the ending balance of Cash at December 31 from the T-account
Provide the balance of the Retained Earnings T-account after closing entries have been posted.
Does the ending balance of the Retained Earnings T-account agree with the balance of Retained Earnings on the Balance Sheet?
Check Point: Total Assets $ 20,950.00

Record (journalize) transactions in the books) Doherty Tree Cellular, Inc.,
completed the following transactions during April 2012, its first month of operations:

Apr 1

Received $19,800 and issued common stock.

2

Purchased $200 of office supplies on account.

4

Paid $14,300 cash for land to use as a building site.

6

Performed service for customers and received cash of $2,600.

9

Paid $100 on accounts payable.

17

Performed service for UFax on account totaling $1,900.

23

Collected $100 from UFax on account.

30

Paid the following expenses: salary, $1,900; rent, $1,300.


1.Record the transactions in the journal of Doherty Tree Cellular, Inc. Key transactions by date and include an explanation for each entry.

CLASS, LETS TAKE RECORDING STEP 1 STEP FURTHER - THE TRIAL BALANCE

Now that we know what the accounting equation is and we have some experience with Journal Entries.

Let’s review the process and take the recording process one step further.

STEP 1) Analyze transaction: As an actual accountant, we determine if a transaction should be recorded by analyzing source documents.

For example: If the Company makes a sale; they will complete a sales document (or sales
tape is generated). If the Company purchases something a purchase invoice is forwarded to Accounting. There is a different type of source documents for different types of transactions.

Note: as an accountant a large part of the battle is making sure there is a source document for all transactions and that all departments capture and forward these documents to Accounting!

STEP 2) Accounting prepares journal entry: for each transaction based on GAAP. (Mostly using the constraints, assumptions, principles we've discussed: materiality, conservatism, matching, revenue recognition, etc).

The entry is entered into a Journal for those types of Transactions (There is a Sales Journal, A/P Journal for purchases, Payroll journal for payroll related entries, General Journal for misc. entries., etc.

Journal entries are made in the proper form, and include: date, description, indent of credit side of each entry.

STEP 3) The Journal entry is posted to General ledger; which includes all activity for all accounts.

However, the recording process is not over. Let’s talk about the trial balance. Please answer ALL however only post ONE question at a time to allow more to participate.

1) Why do we prepare it?