Principles of Accounting

CHAPTER 5
Short Exercises SE1 – SE10, Exercises E3 and E5, and Problems P2 and P3.
SE1.
1. Objective 2. Qualitative 3. Objective 4. Qualitative 5. Objective
SE2.
1. Full disclosure 2. Materiality 3. Cost benefit 4. Conservatism 5. Consistency
SE3.
1. Property, plant and equipment 2. Current liability 3. Current liability 4. Not included 5. Owner’s Equity 6. Current Asset 7. Intangible Asset 8. Current Asset 9. Investment

SE4.
Balance Sheet
May 31, 2011
Assets
Current Assets Cash $200 Accounts Receivable $1100 Merchandise Inventory $600 Total Current Assets $1900 Investments $500 Property Pant Equipment $3000 Less Accumulated Depreciation $700 $2300
Intangible Assets Franchise $200 $__4900_______ Liabilities
Current Liabilities $800
Accounts Payable $100
Total Current Liabilities $900
Long Term Liabilities Notes Payable $400
Total Liabilities $1300
Owner’s Equity
Owners Capital $3600
Total Owners Equity $3600
Total Liabilities & Owner’s Equity $4900------

SE5. 1. Operating Expenses 2. Other revenues & Expenses 3. Not 4. Net Sales 5. Cost of goods sold 6. Operating expenses 7. Other revenues and expenses 8. None
SE6.
Income Statement
For year ended May 31, 2011
Revenues
Net Sales $2400 Interest Income $90 $2490
Costs & Expenses Cost of goods sold $840 Selling Expenses $555 General Expenses $450 Interest Expense $210 Total Costs & Expenses $2055
Net Income $435-----------
SE7.
Income Statement
For the Year Ended May 31, 2011
Net Sales $2400
Cost of goods sold $840
Gross Margin $1560
Operating Expenses Selling Expenses $555 General Expenses $450 Total Operating Expenses $1005
Income from