accounting equation checkpoint
In the power point one had to purchase their own drive-in theatre. One invested $100,000 in their business. The $100,000 would fall as a line item credit under assets and shareholder’s equity. And each side had to balance each other out. Next we had to invest $25,000 for business supplies. This will fall as a debit and credit line item under assets because we spend cash and the $25,000 would increase the value of the business. Next we had to but the land for $150,000. This was a debit and credit line item under assets because we used cash and credit $100,000 under liability because we now owe a debt. After fully balancing the equation, we had $200, 00 in assets (what we invested) and $100,000 in liabilities and shareholder’s equity.
Chapter 1 Accounting in Action: E 1-5 pg. 34 Instructions:
For each of the three situations, say if the accounting method used is correct or incorrect. If correct, identify which principle or assumption supports the method used. If incorrect, identify which principle or assumption has been violated.
E1-5 Meredith Cleaners has the following balance sheet items.
Accounts payable Accounts receivable
Cash Notes payable
Cleaning equipment Salaries payable
Cleaning supplies Common stock
Answer:
I was not clear on what three situations to reference since there was only one listed next to E1-5. However all the items listed should be on a balance sheet for it is defined as a financial statement that reports the assets, liabilities and owner’s equity at a specific date (Weygant, Kimmel & Kieso 2008).
Now question E 1-4 would better suited the answer to the instructions: For each of the three situations, say if the accounting method used is correct or incorrect. If correct, identify which principle or assumption supports the method used. If incorrect, identify which principle or assumption has been violated. Because it reflects 3 scenarios:
E1-4
Chapter 1 Accounting in Action: E 1-5 pg. 34 Instructions:
For each of the three situations, say if the accounting method used is correct or incorrect. If correct, identify which principle or assumption supports the method used. If incorrect, identify which principle or assumption has been violated.
E1-5 Meredith Cleaners has the following balance sheet items.
Accounts payable Accounts receivable
Cash Notes payable
Cleaning equipment Salaries payable
Cleaning supplies Common stock
Answer:
I was not clear on what three situations to reference since there was only one listed next to E1-5. However all the items listed should be on a balance sheet for it is defined as a financial statement that reports the assets, liabilities and owner’s equity at a specific date (Weygant, Kimmel & Kieso 2008).
Now question E 1-4 would better suited the answer to the instructions: For each of the three situations, say if the accounting method used is correct or incorrect. If correct, identify which principle or assumption supports the method used. If incorrect, identify which principle or assumption has been violated. Because it reflects 3 scenarios:
E1-4