Questions and Answers of Fundamental Accounting Principles

Julia says, “I heard that companies use software to do their accounting. Why do we need to learn how to draw T-accounts and prepare trial balances manually?” Explain why knowing the basics of
Explain the concept of owner’s withdrawals and expenses and give an example of each. What are the differences between these two accounts in terms of (1) Type of account, (2) Normal
Explain the concept of Accounts Receivable and Revenue. What are the differences between these two accounts in terms of (1) Type of account (2) Normal balance(3) The financial statement
Ted says, “This debit and credit stuff is easy! Debits increase an account and credits decrease an account!” You do not agree with Ted. Give three examples of accounts where a debit decreases an
You are an accounting manager training a co-op student at the Lululemon head office. Explain to the student the fundamental steps in the accounting process. Why is the accounting cycle important for
Sue Santos is a new entry-level accountant for a snowboard manufacturer. At the end of the fiscal period, Santos is advised by a supervisor to include as revenue for the period any orders that have
Susan Huang began the practice of law October 1, 2017, with an initial investment of $10,500 in cash. She made no withdrawals during the month. After completing the first month of practice, the
Jack Tasker opened his Auto Repair Shop in November 2017. The balance sheet at November 30, 2017, prepared by an inexperienced part-time bookkeeper, is shown below. Required Prepare a correct balance
Lily Zhang started a new business on January 1, 2017, called Zhang Consulting. She develops financial investment plans for young adults. During the business€™s first year of operations, the
On January 1, 2017, Fireworks Fantasia entered its third year of operations. On December 31, 2017, Wes Gandalf, the owner, finalized the company€™s records that showed the following
Dublin Window Cleaners began operations on January 1, 2016. The owner invested $400,000 during the first year and made no withdrawals.During 2017, the business reported profit of $192,000, owner
You are the accountant at Global Consulting. The marketing manager is excited about the success of their new marketing campaign. She boasts, “We spent $1 million on marketing in 2016 and we have
a. Refer to Appendix III at the end of the book. Determine if WestJet Airlines is a sole proprietorship, partnership, or corporation.b. Refer to Appendix III at the end of the book. Determine if
On August 1, 2016, Cross Fitness entered its second year of operations. Cross Fitness provides high- performance group and personal training courses that have been derived from scientific research
Blue Water Kayak began operations on January 1, 2016. The owner invested $10,000 during the first year and was able to withdraw cash of $42,000 after a successful first year.During 2017, the second
You are an accountant at Bright Consulting. The CEO tells his employees, “People are our greatest assets.” When you show him the financial statements, he becomes very angry and demands, “Why do
Natalie Gold is the owner of the marketing agency Vivid Voice. The company focuses on online consult- ing services, such as online marketing campaigns and blog services. The June transactions for
a. Ali invested $4,300 cash and $15,000 of equipment into his business. b. Purchased various supplies on account; $1,600. c. Bought supplies on credit; $950. d. Ali signed a $4,000
Elena Bellisario began a new consulting firm on January 3. The accounting equation showed the follow- ing transactions. Analyze the equation and describe each of the transactions with their amounts.
On July 1, 2017, Windsor Learning Services entered its second month of operations. On July 31, 2017, Milton Windsor, the owner, finalized the company€™s records that showed the following
On November 1, 2017, Jean Higgins started a wedding planning company, Extraordinary Studios. On November 30, 2017, the company€™s records showed the following items. Use this information to
Kate is having a difficult time differentiating all of the account names. €œMy head is spinning when all the accounts sound the same to me! Does unearned revenue belong on the income
For each situation described below, apply the Chartered Professional Accountants of Ontario’s Rules of Professional Conduct—Approach to Ethical Conflict Resolution as identified earlier in the
You have decided to pursue a career in accounting. However, you do not know what area of accounting you want to focus on. Based on your readings and performing some additional research online (job
You are working part-time at Starbucks while you are taking an introductory accounting course. You have learned that accounting information is useful to many users. Identify four external and four
Joan Bennish began Bennish Consulting on May 1, 2017, and reported the items below at May 31, 2017. Match each numbered item with the part of the balance sheet on which it should be presented. If
Tim Roadster began Roadster Servicing on April 1, 2017, and showed the following items after the first month of operations. Match each of these items with the financial statement or statements on
Identify which GAAP most directly describes each of the following correct practices:___________ a. Tracy Regisowns two businesses, Second Time Around Clothing and Antique Accents, both of which are
You are a student taking an introductory accounting course. In week two of the course, your girlfriend broke up with you. You missed the lecture on debits and credits and were lost in week three. You
Identify whether each of the following represents a business or non-business organization.a. Highlands United Church b. Royal Alexandra Hospital c. Toronto-Dominion Bankd. University of
Determine whether each of the following events should be recorded in the accounting records.a. Meeting with the mechanical staff to determine new machine requirements for next year.b. Receiving the
Why is it important to prepare the financial statements (statement of changes in equity, balance sheet, income statement and the statement of cash flows) in a specific order? Identify the specific
Your favourite celebrity has asked you to prepare a personal balance sheet for her. Define (a) Assets, (b) Liabilities, (c) Equity. Identify some of her personal assets and
What transactions increase and decrease equity?
In the first year of selling frozen yogurt, the owner of Swirl invested $10,000 into the business and sold $5,000 of frozen yogurt. The accountant has re- corded $15,000 of revenue. What do
Rachel believes that the terms accounts receivable and accounts payable can be used interchange- ably. Rachel says, “They both show up on the balance sheet and they both are in the accounting
Assets are resources that provide future benefit to a business. Explain how cash, accounts receivable, and supplies provide future benefit to a business.
Jordan thinks the income statement and the bal- ance sheet look the same. Explain to Jordan what information is presented on the income statement and what is presented on the balance sheet.
Identify the auditing firm that audited the financial statements of WestJet in Appendix III.
Tyler is considering a career in accounting, but is not sure what career options are available within accounting. Help Tyler with his decision by iden- tifying three main areas of accounting for ac-
Identify three types of organizations that can be formed as either profit-oriented businesses, gov- ernment entities, or not-for-profit organizations.
Identify two organizations for which accounting information is available in Appendix III at the end of the book.
Review Organico’s financial statements presented in the chapter for the month ended March 31, 2017. Review the balance sheet and determine the business form Hailey Walker has chosen to organize
Review Organico’s financial statements presented in the chapter for the month ended March 31, 2017. Review the balance sheet and determine the busi- ness form Hailey Walker has chosen to organize
Your friends are studying marketing and human re- sources and another is undecided on his major. They say, “This accounting course is a waste of my time when I don’t even want to be an
The chapter’s opening vignette describes Zane Caplansky’s success with his food truck, Thundering Thelma. Explain why accounting is critical for Caplansky’s business and for his expansion

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