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Accounting Systems and Process Assignments 1: CQ 1-1: Four types of software program used to process information are: 1.

Word processing Software: allows us to edit and create document. Eg Microsoft word, Notepad etc 2. Spreadsheet software: allows user to create document and perform calculation. E.g. Excel 3. Data based software: enables to store and retrieve data. E.g. Ms Acess, Oracel etc 4. Presentation graphics software: allows users to create user friendly presentation. E.g. MS PowerPoint. 1-2 match i. ii. iii. iv. 1-3: Central Processing Unit: c. process data and controls computer operations. Expansion and slots and boards: d. used to expand the computers capabilities Memory. A. Storage for the documents and programs. Ports. B. used to attach peripherals like printer.

1. Alt+Prt Sc Sys Rq 2. Ctrl+V to word document

Formula view:

1. Press ctrl+~ 2. Press Alt+Prt Sc Sys Rq 3. Press Ctrl+V on word document.

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1. CAD: Computer aided Design 2. RAM: Random access Memory 3. HDD: Hard Disk Drive 4. DOS: Disk operating Software 5. MS-DOS: Microsoft Disk Operating Software. 6. MPS: Micro Processor System 7. POS: Point Of Scale. 8. CAL: Computer Aided Learning 9. CBT: Computer Based Training 10. CD: Compact Disk

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Wizard: it is the process to Screen Capture: aptures the currenty displayed data to the memory. Thumb drive: small flash memory card. Tablet: Tablet computer is a notebook IOS: iOS is Apple Inc.'s mobile operating system Adroid: Android is a Linux-based operating system for mobile devices. Second life : it is a virtual life in computer and is associated with 3D- modeling. It was developed by Linden Lab. Quick check (QC) 1. C. Financial Accounting Standard Board (FASB). GAAP are formulated by FASAB which works with the governmental agencies like the Securities and Exchange Commission (SEC) and with groups like Public Companies Accounting Oversight Board (PCAOB), and private groups like AICPA and IMA. 2. A. Corporation. In corporation there are generally many stockholders; those who own shares of stock in the business. The life of the organization is indefinite and stockholders are not liable for the business debt. 3. B. cost principle. The acquired assets an services should be recorded at their actual cost. The cost of the entity should record the historical cost till the life of the very entity. Also, if equipment is bought at $2000 which cost $1600 the cost must be recorded as $2000. 4. $105 million; because assets- owners equity= total liability ($345-$240=$105). 5. b. increase both assets and owners equity by $48,000.

Assets=Liabilities + Owners Equity Accounts receivable Revenue


6.d. all the above 7. b. customers. Financial information is needed by all to know the status of the organization. 8. a..Net income of $39,000(revenue-expense)

9. a.Financial position on a specific date. The balanesheet helps us to determine the status of the organization 10. c. Limited liability of stockholders.

S1-1:

Revenue: The amount earned by delivering goods and services to the customer is defined as revenue. Revenue for different firm has different term like for service industry, services rendered are revenue and for goods industry; the amount received after goods are sold is revenue. Expense: Expenses are those entities which decrease the equity by using asset or by increasing liability. Generally expenses are incurred in order to produce revenue. For example, two workers are employed by the organization in order to sell goods then salary paid to them is expense and these workers are indulging to produce revenue.

Exercises: Using the accounting equation to analyze transactions: E1-19 a) Increase Asset(Cash) Increase Owners equity (Capital) b) Increase Asset(Cash) Increase liability (unearned revenue) c) Increase Asset(Office Furniture) Increase Liability (Account Payable) d) Increase Asset(Cash) Decrease Asset (Account Receivables) e) Decrease Asset(Cash) Decrease Liability (Account Payable) f) Decrease Asset( land) Increase Asset (Cash) g) Increase Asset(Cash) Increase Owners Equity (Capital) h) Decrease Asset(Cash) Decrease liability (rent expense) i) Increase Asset(Supplies) Decrease Asset (asset) E1-19: Examples for effects in accounting equation:

a. Increase one asset and decrease another asset: Purchasing inventory from cash. b. Decrease in asset and decrease in owners eqity Withdrawls from firms bank account c. Decrease in asset and decrease in liability: Paying salary by cash which was payable for one month. d. Increase in asset and increase in owners equity. Depositing cash in the banks name. e. Increase in asset and increase in liability; Receiving cash to provide service for next month.

P1-30A: P1-36A: Preparing the income statement 1. Income statement

Income statement Studio Photograpy December 31, 2012 Revenue Service revenue Expenses Advertising expense Salary expense Insurance expense Total expense $80,000 $3,000 $25,000 $8,000 $36,000

Net Income

$44,000

Owners equity Studio Photography Anal Opening Capital Owners investment Net Income Anal Withdrawing Total equity $16,000 29,000 44,000 13,000 $76,000

Studio Photography Balance sheet 31 Dec 2012 Assets Current assets Cash Receivables Equipment Total assets Liabilities Liabilities Accounts payable Notes payable

$37,000 8,000 50,000

7,000 12,000

$95,000 Total liabilities Owners equity

19,000 76,000

Total Liabilities and Owners equity

$95,000

Chapter 2 Quick Check: 1. b. journalize transactions, prepare the trail balance, post to the accounts 2. d. debits 3. b. 132. Because Asset- Liabilities = owners equity and here assets are receivables, furniture and cash (total=322) minus liabilities which are note payable and account payable (total=190) so, owners equity is $132,000. 4. b. Supplies 2,500 Accounts payable 2,500 Because supplies are debit as it is asset and account payable is liability so, its credit. 5. Account payable 2,500 Cash 2,500 Because to clear account payable account it must be debited and cash is here outflow so, it is credited. 6. Supplies 2,500 Account Receivables 2,500

Because left side of T-account is debit and Right side is Credit. 7. b. a journal. 8. B. too much for liability. Because account payable which is on the liability side, when credited increases more, moreover, the account receivables must be credited. 9. c. 131,000 because Owners equity= opening balance (OE)+ net profit(revenue expense). 10. d. Expense 2,500 Cash 2,500

S2-5. Journalizing transactions: Date 1. Accounts and Explanations Cash Owners equity (to record Cash) Supplies Account Payable (to record supplies on account) Office Expenses Cash (to record office expenses) Account Receivables Revenue (to record revenue earned) Debit $29,000 Credit $29,000 $14,000 $14,000 $2,600 $2,600 $8,000 $8,000

2.

3.

4.

E2-14: Chapter 3

Quick Check 1. b. Accrual accounting is superior because it provides more information. The accrual accounting records the effect of each transaction as it occurs which is when revenue is recorded when it is earned and expense is recorded when incurred. 2. b. record revenue only after you have earned. 3. b. recording transactions as they occur during the period. 4. c. Prepaid and accruals. 5. a. Salary expense 2,500 Salary payable 2,500 6. a. Service Revenue of $360 7. b. Prepaid expense 8. c. a liability 9. b. amounts ready for financial statements 10. d. Both a and b are correct. Short Exercises: S3-6: Journalizing adjusting entries Date April1 Accounts and Explanations Prepaid Rent Debit $4,800 Credit

1.

2.

April 30

Cash (to record Prepaid rent) Rent Expense Prepaid Rent (to record supplies on account)

$4,800 $800 $800

T-account: Prepaid Rent (a) $4,800 (b) $800 Bal $4,000 Cash (a) $4,800 Bal $4,800 Rent Expense (b) $800 Bal $800

Exercises: E3-17 Categorizing and journalizing adjusting entries: 1. 2. Date Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Accounts and Explanations Unearned revenue Rent revenue (to record the earned revenue) Salary Expense Salary expense payable (to record accrued expense) Supplies Expenses Supplies (to record the accrued expenses) Depreciation Expense Accumulated depreciation (to record accrued expense) Interest expense Prepaid insurance ( to record accrued insurance) Debit $1,100 Credit $1,100 $6,800 $6,800 $1,800 $1,800 $300 $300 $250 $250

a.

b.

c.

d.

e.

E3-26 Preparing the income statement 2. Income statement

Income statement Reva Stewart December 31, 2012 Revenue Service revenue Expenses Salary expense Supplies expense Depreciation expense- eqip Depreciation expense-bidg Total expense Net Income $106,500 $29100 $600 $1900 $5000 $36,600 $69,900

3. Were 2012 operations successful? Yes the operations were successful. P3-45B 1. Journalize the adjusting entries. Date a. Accounts and Explanations Insurance expense Prepaid insurance (to record accrued expense ) Supplies expense Supplies (to record supplies ) Depreciation Expenses Accumulated depreciation (to record accrued expenses) Salary expense Salary expense payable (to record accrued salary expense) Unearned Service revenue Service revenue (to record acquired revenue) Debit $900 Credit $900 $500 $500 $1,000 $1,000 $300 $300 $1500 $1500

b.

c.

d.

e.

Ledger Account:

Insurance Expense 900

Prepaid Insurance 900

Supplies expense 500 500

Supplies

Depreciation expense 1000

Accumulated depreciation 1000 300

salary expense

Salary expense payable 300

unearned revenue 1500

service revenue 1500

CONCORD BED AND BEEAKFAST COMPANY Trail Balance December 31, 2012 Account Title Cash Account Receivable prepaid insurance Supplies Building Accumulated depreciation Account payable Salary payable Unearned service revenue Wanger, capital Wanger, drawing Service revenue salary expense insurance expense depreciation expense advertising expense supplies expense Total Net Income Unadjusted Trail Balance 12000 14400 2800 1400 435000 310500 1930 3000 141060 2940 15700 2800 300 900 1000 500 4200 1500 3100 900 1000 850 500 6350 17200 Adjustments Profit & Loss Balance Sheet 12000 14400 1900 900 435000 311500 1930 300 1500 141060 2940

900 500 1000 300 1500

850 472190 472190 4200

17200

467140 467140

456290 10850 467140

Chapter 4: Quick Check: 1. a. Financial statement, because it allows us to extract many ratios e.g. inventory turnover, liquidity ratio, quick ratio, credit ratio, asset liability ratio and many more which in fact is a valuable information about the organization performance level and helps whether to expand the business or not. 2. b. Trail balance: according to the accounting cycle the data for the trail balance comes from the ledger account and which is unadjusted. 3. d. cash, Salary payable, and Salary expense 4. a. total debits exceeds total credits, because income statement is all related with revenue and expense and the end result in income statement is net profit which is equal to revenue less expenses so, as we know revenue is credit and expense is debit. 5. c. Supplies Expenses 4,000 Supplies 4,000 Because to supplies used is 4,000 so to cancel supplies of 4,000 it must be credited and to increase supplies expense it must be debited. 6. d. Accumulated depreciation; because closing entries transfers revenue, expose, and withdrawal balance to the capital account. 7. a. Zero out the revenues, expenses, and drawing; because the closing account consists of journalizing and posting the closing entries to set the balances of the revenue, expense, and withdrawal account to zero for the next period. 8. b. Salary payable XXXX Income summary XXXX Because closing entry includes revenue and expenses and drawing which is later posted to capital account through income summary whereas salary payable is balance sheet entity and which is current liability. 9. Liquidity; balance sheet is arranged in such a way that the entity which appear ahead are more liquid then the forthcoming, for example current assets are more liquid then long-term asset. Cash is more liquid than inventory (arranged in liquidity preference even within each specific categories of entity, e.g. current asset, long term asset). Here both cash and inventory are current assets.

10. a. 2.71 Current ratio=( total current assets)/(total current liabilities) = (600+900+400=1900)/ (500+200) = (1900)/ (700) =2.71 S4-9: Classifying assets and liabilities as current or long-term: A. Identifying Assets: Current assets a. Cash b. Receivables c. Prepaid expense Long term assets a. Buildings b. Equipment c. Contra asset account: Accumulated Depreciation B. Identifying Liabilities: Current Liabilities a. Account Payable b. Accrued liabilities(such as salary payable)

Jet Fast Printing Assets Current assets Cash Receivables Prepaid expense Total current assets Liabilities Current Liabilities Accounts payable Accrued Liabilities

$400 700 300

600 400

$1400 Total liabilities

1000

Long term Assets Building Equipment Less: Accumulated depreciation Total long-term Assets Total Assets 4200 1100 3000

5000 6400

P4-25A: Date 31 Dec 2012

a.

b.

31 Dec 2012

c.

31 Dec 2012

d.

31 Dec 2012

e.

31 Dec 2012

Adjusting Journal entries: Fugazy Investment Accounts and Explanations Unearned revenue Service revenue (to record incurred revenue ) Supplies expense Supplies (to record supplies usages ) Depreciation Expenses Accumulated depreciation (to record accrued expenses) Salary expense Salary payable (to record accrued salary expense) Unearned Service revenue Service revenue (to record acquired revenue) Adjusting Journal entries: LEOPARD ANVILS Accounts and Explanations Unearned service revenue Service revenue (to record incurred revenue ) Rent expense Prepaid rent (to record supplies usages ) Supplies expense Supplies ( to record supplies expense) Depreciation Expenses Accumulated depreciation (to record depreciation expenses) Salary expense Salary payable (to record accrued salary expense)

Debit $500

Credit $500

$1000 $1000 $6,000 $6,000 $1000 $1000 $4000 $4000

P4-32B:

a.

Date 31 Jan 2012

Debit $4500

Credit $4500

b.

31 Dec 2012

$1,800 $1,800 $1,100 $1,100 $400 $400 $500 $500

c.

31 Dec 2012

d.

31 Dec 2012

e.

31 Dec 2012

Bibliography
Charles Davis Enterprises, C. H. (n.d.). http://www.web-friend.com/index.html. Retrieved 04 03, 2012, from web-friend.com: http://www.web-friend.com/help/lingo/pcacnm.html University, J. S. (n.d.). CS201-Lecture7. Retrieved 4 3, 2012, from http://www.jsu.edu/mcis/: http://mcis.jsu.edu/faculty/malam/CS201-Lecture7.htm

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