The following general ledger accounts are included in the trial balance for an audit client, Jones Wholesale Stationery Store.
Income tax expense Income tax payable Accounts receivable Advertising expense Travel expense Bonds payable Common stock Unexpired insurance Furniture and equipment Cash Notes receivable Purchases Sales salaries expense Allowance for doubtful accounts Inventory Property tax expense Interest expense Amortization expense- furniture and equipment Retained earnings Sales Salaries, office and general Telephone and fax expense Accumulated amortization of furniture and equipment Notes payable Property tax payable Bad-debt expense Interest receivable Insurance expense Interest income Accrued sales salaries Rent expense Prepaid interest expense
REQUIRED
a. Identify the accounts in the trial balance that are likely to be included in each transaction cycle. Some accounts will be included in more than one cycle. Use the format that follows.
b. How would the general ledger accounts in the trial balance most likely differ if the company were a retail store rather than a wholesale company? How would they differ for a hospital or a government unit?
CycleBalance Sheet AccountsIncome Statement Accounts
Sales and collection Acquisition and payment Human resources and payroll Inventory and distribution Capital acquisition and repayment