MGAB01H3 Study Guide - Midterm Guide: Cashis, Soo Line Railroad, Asset Turnover

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MGAB01H3 Full Course Notes

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Chapter 3: operating decisions and the income statement: explain the differences between, revenues and gains, expenses and losses. Accrual accounting: 5 criteria that must be met for revenue to be recognized under accrual basis of accounting a) b) c) d) e, explain the matching principle, total asset turnover ratio, return on asset ratio. Toyota receives an order from a customer for a car, and he pays a 30% down payment in. Toyota delivers the car in 30 days, giving the customers the keys then and getting the remaining 70%. Abc sells a product at fob (free-on-board) shipping point. It is delivered on dec. 20 but the client only receives it on jan. 2. Prepare a multi-step income statement for john"s for the month of july 2014. Chapter 3: operating decisions and the income statement: explain the differences between, revenues and gains. Revenue = amount earned from main activities (e. g. selling merch)

Related Questions

Answer the following accounting related questions:

a. Explain the difference between the accrual basis ofaccounting and the cash basis of accounting.

b. Define the matching principle.

c. How are revenues and expenses defined under accrualaccounting?

d. What are the double entry accounting system and the dualityconcept? How are they related?

e. What is the basic accounting equation?

Approximately 2 paragraphs perquestion (reference/ source material- Chapter 8 textbook).

Reference/ Textbook: | Essentials of Health Care Finance |Edition: 7

citation APA style.

Thank you so much

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indigowhale492

(Learning Objective 1: Explain how accrual accounting differs from cash-basis accounting)âHough Consulting had the following selected transactions in July:

July 1 Prepaid insurance for July through September, $4,200.

2 Purchased office furniture for cash, $5,000.

3 Performed consulting services for a client on account, $3,500.

5 Paid advertising expense, $500.

10 Performed consulting services and received cash, $1,500.

20 Purchased a computer on account, $2,500.

25 Collected for July 3 service.

26 Paid account payable from July 20.

29 Paid salary expense, $1,800.

31 Adjusted for July insurance expense (see July 1).

31 Earned revenue of $1,000 that was collected in advance back in June.

31 Recorded July depreciation on fixed assets, $125.

LO USING EXCEL:

1. Show how each transaction would be handled (in terms of recognizing revenues and expenses) using the cash basis and the accrual basis.

2. Compute July income (loss) before tax under each accounting method

3. Indicate which measure of net income or net loss is preferable. Use the transactions on July 3 and July 25 to explain.

Req. 1 & 2
Hough Consulting
Amount of Revenue (Expense) for July
Date		Cash Basis	Accrual Basis
July 1












	Income (loss) before tax	$ -	$ 0

Req. 3

greyplatypus825

(Learning Objective 1: Explain how accrual accounting differs from cash-basis accounting)âHough Consulting had the following selected transactions in July: