Chapter 3, The Accounting Information System Video Solutions, Intermediate Accounting

Problem 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.
(c) A prospective employee is interviewed.

Oluwadamilola Ameobi

Numerade Educator

01:44

Problem 2

Do 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
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.

Jennifer Stoner

Numerade Educator

04:47

Problem 3

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.

Puneet Prajapati

Numerade Educator

06:31

Problem 4

Why are revenue and expense accounts called temporary or nominal accounts?

Puneet Prajapati

Numerade Educator

01:51

Problem 5

Andrea Pafko, a fellow student, contends that the double-entry system means that each transaction must be recorded twice. Is Andrea correct? Explain.

Prabhakar Kumar

Numerade Educator

06:15

Problem 6

Is it necessary that a trial balance be taken periodically? What purpose does it serve?

Puneet Prajapati

Numerade Educator

04:29

Problem 7

Indicate whether each of the items below is a real or nominal account and whether it appears in the balance sheet or the income statement.
(a) Prepaid Rent.
(b) Salaries and Wages Payable.
(c) Merchandise Inventory.
(d) Accumulated Depreciation.
(e) Office Equipment
(f) Service Revenue.
(g) Office Salaries Expense.
(h) Supplies on Hand.

Oluwadamilola Ameobi

Numerade Educator

01:10

Problem 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.

Carson Merrill

Numerade Educator

00:37

Problem 9

(a) How do the components of revenues and expenses differ between a merchandising company and a service enterprise? (b) Explain the income measurement process of a merchandising company

Luke P

Numerade Educator

01:46

Problem 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

Prashant Bana

Numerade Educator

01:02

Problem 11

What are adjusting entries and why are they necessary?

Nick Johnson

Numerade Educator

01:56

Problem 12

What are closing entries and why are they necessary?

Sarah X

Numerade Educator

02:22

Problem 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.
Compute the amount of depreciation expense (related to the mower and accessories) that should be reported on Boston's December 31,2010 , income statement. Assume
straight-line depreciation.

Sheryl Ezze

Numerade Educator

01:25

Problem 14

Midwest Enterprises made the following entry on December 31,2010
(To record interest expense due on loan from Anaheim National Bank.)
What entry would Anaheim National Bank make regarding its outstanding loan to Midwest Enterprises? Explain why this must be the case.

Catt Huth

Numerade Educator

01:29

Problem 15

Are all international companies subject to the same internal control standards? Explain.

Heather Duong

Numerade Educator

01:00

Problem 16

What are some of the consequences of international differences in internal control standards?

Simon Kangoun

Numerade Educator

01:16

Problem 17

Briefly describe the key elements of international auditing convergence.

Dorcas Attuabea Addo

Numerade Educator

05:30

Problem 18

Distinguish between cash-basis accounting and accrualbasis accounting. Why is accrual-basis accounting acceptable for most business enterprises and the cash-basis unacceptable in the preparation of an income statement and a balance sheet?

Anas Venkitta

Numerade Educator

01:32

Problem 19

When wages expense for the year is computed, why are beginning accrued wages subtracted from, and ending accrued wages added to, wages paid during the year?

Garrett Bess

Numerade Educator

02:51

Problem 20

List two types of transactions that would receive different accounting treatment using (a) strict cash-basis accounting, and (b) a modified cash basis

Oluwadamilola Ameobi

Numerade Educator

00:29

Problem 21

What are reversing entries, and why are they used?

Xiao Zi Huang

Numerade Educator

01:05

Problem 22

"A worksheet is a permanent accounting record, and its use is required in the accounting cycle." Do you agree? Explain.

Prashant Bana

Numerade Educator