Question 1

What is goodwill and how is it classified in terms of the accounting equation?

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Question 2

What distinguishes noncurrent assets from current assets?

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Question 3

What is the relationship between a T-account and a journal entry?

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Question 4

Explain how tenants record rent paid in advance for an office building and how a landlord or owner of the property rented records the receipt of the advance payment. Show journal entries as part of your answer.

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Question 5

Describe the balance sheet equation and the dual effects of transactions.

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Question 6

Many firms, especially in their first years of operation and growth, face a variety of challenges obtaining funds to finance their growth.
Required:
Discuss how a small, young manufacturing firm that has a relatively unpredictable revenue stream might approach financing a new manufacturing line.

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Question 7

Explain the terms debit and credit. In your discussion, also present the debit and credit rules that are critical for maintaining T-accounts, as well as the equality of the balance sheet.

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Question 8

Why does every accounting transaction have two effects?

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Question 9

Explain the difference between inventories for a retailer versus a manufacturer.

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Question 10

Several actions that an organization may take are not recognized or entered in the accounting records.While not entered into the formal accounting system, several such actions are exceedingly important to the organization.
Required:
Comment on the current and future implications that the hiring of a new president may have on the organization's accounting records.

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Question 11

Describe T-accounts and how they are used.

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Question 12

Explain the order of assets and liabilities in the balance sheet under U.S.GAAP and IFRS.

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Question 13

Assume that a firm uses the accrual basis of accounting.Indicate the amount of expense the firm recognizes during the month of November for each independent transaction.
a.Rent of $3,600 is paid on November 1 for the months November through January.
b.Inventory costing $2,500 is ordered on account.The invoice is received on November 25 and the goods are received on December 5.
c.Insurance premium of $900 is paid for a full year of coverage starting November 1.
d.On December 3, an invoice for November utilities of $325 is received.
e.On November 1, supplies costing $2,200 are purchased.At November 30, $500 of supplies remained on hand.

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Question 14

What is the purpose of using contra accounts? What is the alternative to using them?

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Question 15

Describe a typical balance sheet.

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Quiz 2: The Basics of Record Keeping and Financial Statement Preparation: Balance Sheet