Generally Accepted Accounting Principles and Year-end Adjusting Entries
The review will be held SUNDAY, September 29th from 3 to 6 PM in Woodruff Auditorium of the Kansas Union. Complete this packet prior to attending the review!!!
Short Answer
1. State the fundamental accounting equation.
2. What are the two components of stockholder’s equity?
3. What is the formula for current ratio, quick ratio, debt ratio, and working capital?
4. What is the group that presently creates accounting standards?
5. What gives the board of directors the right to change a company’s CEO?
6. What three things do you need to recognize revenue according to the revenue recognition concept?
7. What is the purpose of adjusting entries?
8. What is the revenue concept and the matching concept?
9. When do you recognize revenues and expenses under cash and accrual accounting?
10. When can you use reversing entries?
11. Where do we close dividends to?
12. What is double taxation?
Adjusting Entries
Caitlin started her own pet store, specializing in Siberian Huskies. Make the appropriate entries for the transactions described below. Caitlin closes her books on December 31.
1. On Jan 1, Caitlin sold common stock in the amount of $100,000 cash.
2. On March 31, Caitlin purchases a giant dog washing machine. The machine cost $250,000. Caitlin paid $100,000 cash and signed a note for the remaining amount. Interest of 10% is compounded annually and due in 1 year. The machine has a useful life of 10 years.
3. On August 1, Caitlin paid cash for prepaid insurance in the amount of $9,000. This will cover Caitlin’s store for 3 years.
4. On September 1, Stephanie signed a contract with Caitlin to have her dog washed 5 times (on the last day of every month). Stephanie paid Caitlin the entire contracted amount of $1,000 (it is a huge dog) upon signing the contract.
Short Answer
1. State the fundamental accounting equation.
2. What are the two components of stockholder’s equity?
3. What is the formula for current ratio, quick ratio, debt ratio, and working capital?
4. What is the group that presently creates accounting standards?
5. What gives the board of directors the right to change a company’s CEO?
6. What three things do you need to recognize revenue according to the revenue recognition concept?
7. What is the purpose of adjusting entries?
8. What is the revenue concept and the matching concept?
9. When do you recognize revenues and expenses under cash and accrual accounting?
10. When can you use reversing entries?
11. Where do we close dividends to?
12. What is double taxation?
Adjusting Entries
Caitlin started her own pet store, specializing in Siberian Huskies. Make the appropriate entries for the transactions described below. Caitlin closes her books on December 31.
1. On Jan 1, Caitlin sold common stock in the amount of $100,000 cash.
2. On March 31, Caitlin purchases a giant dog washing machine. The machine cost $250,000. Caitlin paid $100,000 cash and signed a note for the remaining amount. Interest of 10% is compounded annually and due in 1 year. The machine has a useful life of 10 years.
3. On August 1, Caitlin paid cash for prepaid insurance in the amount of $9,000. This will cover Caitlin’s store for 3 years.
4. On September 1, Stephanie signed a contract with Caitlin to have her dog washed 5 times (on the last day of every month). Stephanie paid Caitlin the entire contracted amount of $1,000 (it is a huge dog) upon signing the contract.