Q4.Q5.Q7.Q10.Q11
ndi di Asco 1. Give an example of a transaction that results in: (a) A decrease in an asset and a decrease in a liability. (b) A decrease in one asset and an increase in another asset. (c) A decrease in one liability and an increase in another liability 2. o the following events represent business transactions? Explain your answer in each case. (a) A computer is purchased on account (b) A customer returns merchandise and is given credit ven credit on account. (c) A prospective employee is interviewed. (d) The owner of the business withdraws cash from the business for personal use. (e) Merchandise is ordered for delivery next month. Name the accounts debited and credited for each of the following transactions. (a) Billing a customer for work done. (b) Receipt of cash from customer on account. (c) Purchase of office supplies on account. (d) Purchase of 15 gallons of gasoline for the delivery truck. Why are revenue and expense accounts called temporary or nominal accounts? Andrea Pafko, a fellow student, contends that the double- entry system means that each transaction must be re- corded twice. Is Andrea correct? Explain. 6. Is it necessary that a trial balance be taken periodically? What purpose does it serve? ndicate whether each of the following items is a real or ominal account and whether it appears in the balance sheet or the income statement. (a) Prepaid Rent (b) Salaries and Wages Payable. (c) Inventory (d) Accumulated Depreciation Equipment. (e) Equipment. (f) Service Revenue. (g) Salaries and Wages Expense. (h) Supplies. 8. Employees are paid every Saturday for the preceding work week. If a balance sheet is prepared on Wednesday, December 31, what does the amount of wages earned during the first three days of the week (12/29, 12/30, 12/31) represent? Explain. 9. (a) How are the components of revenues and expenses different for a merchandising company? (b) Explain the in- come measurement process of a merchandising company. 10. What differences are there between the trial balance before closing and the trial balance after closing with respect to the following accounts? (a) Accounts Payable. (b) Expense accounts. (c) Revenue accounts. (d) Retained Earnings account. (e) Cash 11. What are adjusting entries and why are they necessary? 12. What are closing entries and why are they necessary? 13. Jay Hawk, maintenance supervisor for Boston Insurance Co., has purchased a riding lawnmower and accessories to be used in maintaining the grounds around corporate headquarters. He has sent the following information to the accounting department
