Questions and Answers of Glencoe Accounting First Year Course

On October 14 Canton Car Care Center issued a $10,000, 60-day, 12% non-interestbearing note payable to Canton National Bank.1. Which accounts are debited and which are credited? What are the debit
When considering a borrower’s long-term debt, lenders often consider the debt to equity ratio. This ratio compares the resources the lender will provide to the borrower’s resources. It is
a. What accounts are affected by the issuance of an interest-bearing note payable, and how are they affected?b. What accounts are affected by the payment of an interest-bearing note payable, and how
Qupre, Inc. signed a 90-day, 9.75% note with First State Bank for $1,200 on August 1. The maturity date for the note isa. October 30.b. November 1.c. October 28.d. November 2.
You need to borrow $10,000 for six months. Interest rates are expected to drop from 7% to 5.5% within the next week. How much would you save by waiting an additional week to obtain your loan?
a. What accounts are affected by the receipt of a note receivable, and how are they affected?b. What accounts are affected by the payment of a note receivable, and how are they affected?
Consider a $5,000, 6%, 180-day interest-bearing note and a non-interestbearing note for the same amount and time period with a bank discount of 6%. From the borrower’s point of view, which is the
Occasionally, on the maturity date, a note may be renewed instead of being paid. When this occurs, (1) the interest on the first note is paid, (2) the first note is canceled, and (3) a new note for
The following is a partial list of accounts used by River’s Edge Canoe & Kayak. Instructions In your working papers, record the following transactions in a cash receipts journal (page 67),
On June 1 Matthew Deck and Jennifer Rusk agree to combine their sole proprietorships into a new business, Dreamscapes Catering, organized as a partnership. The partnership will take over all assets
You and your friend Marianne Shelton have discussed forming a partnership to provide desktop publishing and layout services to local businesses. You have chosen a business name: The Perfect Paper.
Name three methods partners can use to divide net income and net loss.
The drawing account shows each partner’sa. Withdrawal of cash only.b. Withdrawal of all assets.c. Additional investments.d. All of the above.e. None of these answers
a. List five characteristics of a partnership.b. List three advantages and three disadvantages of the partnership form of business.
Arturo Garcia and Marcela Melendez are partners in Family Dental Center. They share equally the income and the costs of office rent, utilities, insur ance, and salaries for the four people who work
You and your best friend Harold have started a jewelry business. He manages the business while you make the jewelry. Your designs are very successful, but because of Harold’s mismanagement, the
Following are the ratios used by several partnerships to divide net income or net loss.InstructionsDetermine the fractions that are used to calculate each partner’s share of net income or net loss.
Choose a classmate and discuss a partnership for a business the two of you might like to own and operate. Use your creativity. Prepare a partnership agreement that spells out the details. Include
a. What information is usually included in a partnership agreement?b. How does accounting for a partnership differ from that for a sole proprietorship?
The right of all partners to contract for a partnership is calleda. Mutual agency.b. A partnership.c. A partner’s agreement.d. Voting rights.e. None of these answers
Explain what mutual agency means in terms of a partnership.
Two of your friends own The Gold Medal, a sports restaurant. They may have to close it because, as partners, they disagree about expanding.INSTRUCTIONS1. Acting as a mediator, role-play the
a. When assets other than cash are invested in a partnership, at what amount are the assets recorded?b. What is the journal entry to record a partner’s investment of cash?
Assume that Bernard’s Novelty is a partnership. Which transaction would occur if Partner A withdraws cash for personal use to purchase an automobile?a. Debit Salary Expense and credit Cashb. Debit
Listed here are the net income and the method of dividing net income or net loss for several partnerships. InstructionsUse the form provided in your working papers to determine each partner’s
Three people form a partnership. A invests $10,000; B, $25,000; and C, $35,000. If they share net income of $100,000 based on their original investments, what is the profit sharing ratio, and how
One way a company can increase sales is to enter a foreign market in a joint venture with a local firm. The two companies share capital, technology, risks, rewards, and control. The local company
a. What accounts are affected when a partner withdraws cash for personal use?b. What determines the amount of cash or other assets a partner may withdraw from the business for personal use?
If a partner invests a noncash asset in the partnership, the amount to be debited and credited would bea. The asset’s cost.b. The asset’s book value.c. The asset’s current market value.d. An
Listed here are an individual partner’s investments for several partnerships.InstructionsUsing the form provided in your working papers, calculate Partner A’s percentage ownership in each
Explain the purpose of withdrawals accounts for a partnership.
Entrepreneurs recognize and meet the needs of the business world. They must organize, manage, and assume risks. If you plan to be a sole proprietor, partner, or corporate executive, you will need the
a. What factors do partners usually consider when deciding on how the profits and losses of the partnership will be divided?b. Name three methods partners might use to divide profits and losses.
Rewrite: 3/5 as a decimal.a. 1.67b. .4c. .6d. .0167
Analyze what you believe to be the most important advantage and disadvantage of the partnership form of organization.
The net income or net loss from a partnership represents a return on the equity the partners invested in the business. Return on equity states a company’s net profit or net loss as a percentage of
On May 1 Jason Pua and Roy Nelson formed the partnership called JR Landscaping. Jason contributed $8,100 cash and all of his landscaping equipment. Jason had purchased the equipment for $2,500 last
Defend the statement that a partnership agreement is advisable.
Mariela DeJesus and Natasha Faircloth started the partnership In Shape Fitness. Mariela contributed a capital balance of $35,000. Natasha’s capital contribution totaled $45,000. Their partnership
Jo Garrity, Maureen O’Riley, and David White decided to form a partnership called OnTime Copy Shop. The partners will invest the following assets in the business: They are considering the
Toni Graff, Ahmad Nu, and Lindsay Pane are partners in Travel Essentials. Their partnership agreement stated that withdrawals would be 10 percent for each partner based on the partnership’s net
Barbara Scott and Martin Towers are partners in the firm of Ten Column Accounting Services. Their partnership agreement states that Scott and Towers share net income or net loss in a 3:2 ratio.At the
Imagine that you have been asked to explain the following terms and how they might relate to a timber company organized as a partnership. dissolution liquidation statement of changes in
When there is a net loss, thea. Capital account is increased by the amount of the net loss.b. Drawing (Withdrawals) account is increased by the amount of the net loss.c. Capital account is decreased
Separate the businesses into for-profit and not-for-profit categories.
people how they see you. Ask at least 10 people to name three words they think describe you. Ask them to give you descriptive words such as these:• Dependable• Fun• Quick-thinking• DecisiveDo
Compare and contrast merchandising and manufacturing businesses.
a. Describe the relationship between assets and equities.b. Name the two types of equities in a business, and give an example of an account that is used for each type.
If a customer sends in a payment on his account owed, which of the following statements is true?a. One asset increases and another asset decreases.b. One asset increases and one liability
Does owner’s equity increase every time a business acquires a new asset? Explain your answer.
Regina Delgado, owner of Hot Suds Car Wash, uses these accounts:In your working papers:1. Determine which accounts are affected for each transaction.2. Prepare T accounts for the accounts affected.3.
Accounts that are continuous from one accounting period to the next and balances are carried forward are referred to as a. Permanent accounts.b. Fiscally continuous.c. Post-closing assets.d.
Your business receives a refund check from the utility company because it overcharged your business in the past. Which account is debited? Which account is credited?
Each of the following is a business expense except a payment fora. Equipmentb. Advertisingc. Rentd. Utility bills
Abe Shultz, owner of Kits & Pups Grooming, uses the following accounts to record transactions for the month.For each transaction:1. Prepare a T account for each account listed.2. Enter a balance
Which temporary accounts affect profit or loss for an accounting period?
If the owner of a company takes merchandise for personal use, what account is debited?a. Owner’s capitalb. Owner’s withdrawalsc. Purchasesd. Cash
Juanita Ortega operates Outback Guide Service. She uses the following accounts to record and summarize her business transactions. For each transaction:1. Prepare a T account for each account the
Write an equation for owner’s equity at the end of an accounting period. Start the equation with “Beginning Owner’s Capital” and end the equation with “Ending Owner’s Equity.”
Greg Failla owns Showbiz Video. He uses the following accounts to record business transactions.For each transaction:1. Prepare a T account for each account listed above.2. Analyze and record each of
Evaluate the practice of using temporary accounts for recording certain transactions, as opposed to using the owner’s capital account.
Recording account information in chronological order is calleda. Posting.b. Journalizing.c. Analyzing.d. Processing.
What term describes any accounting period of 12 months?
Jacqueline earns 18% commission on sales. Her sales for three months were: $2,870, $3,150, and $3,940. What was her total commission for the three months?a. $9,960.00b. $1,792.08c. $1,792.80d.
Signed a 90-day, 10% notea. Debit Cash, credit Notes Receivableb. Debit Cash, credit Notes Payablec. Debit Accounts Receivable, credit Cashd. Debit Cash, credit Accounts Receivable
Explain what a promissory note is and distinguish between the two types, notes payable and notes receivable.
Moreno’s Italian Oven is open seven days a week for lunch and dinner. The restaurant seats 60 patrons in a day and averages 90 percent capacity. It is considering expanding into the space adjacent
You work for a large property management company. Your boss, Joan, is the senior accountant; and her boss, Frank, is vice president. For the past several months, Joan has been coming to work late,
You write the copy for and design brochures to highlight New South Bank’s many financial products. Today you were asked to prepare a brochure explaining the value of non-interest-bearing notes.
As a staff accountant for Advanced Micro Devices, you have been asked to discuss the company’s notes payable and receivable with the accounting clerks. Prepare note cards containing the terms
a. Name the two parties to a promissory note. Which party issues the note? Which party receives the note?b. Describe a situation in which a business might (a) receive a promissory note and (b) issue
Explain how an interest-bearing note and a non-interest-bearing note differ.
Good Times Amusement Park has offered you a full-time job. Before you can accept it, you must arrange for transportation.INSTRUCTIONS List estimated costs of owning a car compared to using other
a. What type of account is Notes Payable, and what is its normal balance?b. What type of account is Notes Receivable, and what is its normal balance?
Morton Co. accepts a 60-day, 11% note from Anderson Imports for an extension of time on its account, $990.00 Notes Receivable No. 5. The credit for this transaction would be made toa. Accounts
Morton Co. accepts a 60-day, 11% note from Anderson Imports for an extension of time on its account, $990.00 Notes Receivable No. 5. The effect of this transaction on the customer’s account in
Calculate the amount of interest to be charged on a $12,000, 8.5%, 90-day interest-bearing note.
The International Finance Corporation (IFC) helps finance projects in developing countries to reduce poverty and improve people’s lives. Projects must be profitable and benefit the host country’s
On June 12 Frank’s Lobster Pound issued a $9,000, 120-day, 12% note payable to American Bank of Commerce.1. Which account is debited? What is the debit amount?2. Which account is credited? What is
a. What is the difference between interest-bearing and non-interest-bearing notes?b. What is the difference between interest and a bank discount?
Find the interest and maturity value for a 60-day note with principal of $1,500 and interest at 8 percent.a. $120.00 interest; $1,620.00 maturity valueb. $32.88 interest; $1,532.88 maturity valuec.
Explain the difference between interest expense and interest income.
Use these accounts to analyze the business transactions of WordService.On the form provided in your working papers, identify the accounts affected by each transaction and the amount of increase or
The accounting equation is ASSETS LIABILITIES OWNER’S EQUITY. Property ASSETS Items of value owned by the business || Financial Claims LIABILITIES Financial claims of creditors OWNER'S
As it is used in accounting, the term equities refers to the financial claims on assets (property).The two types of equities in a business are• Creditors’ financial claims, called liabilities,
Use these account balances to complete the next two questions: If the balance in Accounts Payable is $2,000.00 and Grooming Revenue is $400.00, what is the correct balance for the Accounts
a. What is the accounting equation?b. Give an example of an account for each part of the accounting equation.
If owner’s equity is $25,500, and assets are $37,600, liabilities are.a. $25,500.b. $37,600.c. $63,100.d. $12,100.
a. What is double-entry accounting?b. Define the terms debit and credit.
a. What is meant by the term normal balance?b. What is the normal balance for asset accounts? For liability accounts? For the owner’s capital account?
Regina Delgado owns a business called Hot Suds Car Wash. She uses the following accounts:For each transaction:1. Determine which accounts are affected.2. Prepare T accounts for the accounts
For each of the following transactions, state whether Cash in Bank is debited, credited, or not changed: (a) The business paid cash for a desk; (b) The business bought a computer on
a. What is the purpose of a T-account?b. Name the three basic parts of a T-account.
Abe Shultz owns Kits & Pups Grooming and uses the following accounts:For each transaction:1. In your working papers, prepare a T account for each account listed.2. Using the appropriate T
What is the relationship of a T-account to a ledger account?
a. What are the six steps used to analyze a business transaction?b. Explain briefly what is meant by the following phrase:A debit of $100 to Cash in Bank
Think of a business you would like to open. Create a chart of accounts for the business. Include at least 10 different accounts.
Juanita Ortega runs Outback Guide Service. The accounts she uses to record and report business transactions are listed below.For each transaction:1. In your working papers, prepare a T account for
Evaluate the usefulness of double-entry accounting.
Caroline Palmer uses the following accounts in her San Francisco–Los Angeles commuter shuttle service.In the form provided in your working papers, provide the following information for each

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