《21版會計學》習題部分第1章23-46頁.pdfVIP

K Chapter 1 Introduction to Accounting and Business23 Key Points 1 Describe the nature of a business. A business is an organization in which basic resources (inputs), such as materials and labor, are assem- bled and processed to provide goods or services (outputs) to cus- tomers. The objective of most busi- nesses is to maximize profits. There are three different types of businesses that are operated for profit: manufacturing, merchandis- ing, and service businesses. A busi- ness is normally organized in one of the following forms: proprietor- ship, partnership, corporation, or limited liability corporation. A busi- ness stakeholder is a person or en- tity (such as an owner, manager, employee, customer, creditor, or the government) who has an interest in the economic performance of the business. 2 Describe the role of accounting in business. Accounting is an information system that provides reports to stakeholders about the economic activities and condition of a business. Accounting is the “l(fā)anguage of business.” 3 Describe the importance of business ethics and the basic principles of proper ethical conduct. Ethics are moral principles that guide the conduct of individuals. Proper ethical conduct implies a behavior that considers the impact of ones ac- tions on society and others. Sound ethical principles include (1) avoid- ing small ethical lapses, (2) focusing on your long-term reputation, and (3) being willing to suffer adverse personal consequences for holding to an ethical position. 4 Describe the profession of accounting. Accountants are engaged in either pri- vate accounting or public accounting. The two most common specialized 7 Explain how business transac- tions can be stated in terms of the resulting changes in the basic elements of the account- ing equation. All business transactions can be stated in terms of the change in one or more of the three elements of the accounting equation. That is, the effect of every transaction can be stated in terms of increases or decreases in one or more of these elements, while maintaining the equality between the two sides of the equation. 8 Describe the financial state- ments of a proprietorship and explain how they interrelate. The principal financial statements of a proprietorship are the income statement, the statement of owners equity, the balance sheet, and the statement of cash flows. The income statement reports a periods net in- come or net loss, which also appears on the statement of owners equity. The ending owners capital reported on the statement of owners equity is also reported on the balance sheet. The ending cash balance is reported on the balance sheet and the statement of cash flows. 9 Use the ratio of liabilities to owners equity to analyze the ability of a business to with- stand poor business conditions. The ratio of liabilities to owners eq- uity is useful in analyzing the abil- ity of a business to pay its creditors. The lower the ratio, the better able the business is to withstand poor business conditions and still fully meet its obligations to creditors. fields of accounting are financial ac- counting and managerial accounting. Other fields include cost accounting, environmental accounting, tax ac- counting, accounting systems, inter- national accounting, not-for-profit accounting, and social accounting. 5 Summarize the development of accounting principles and relate them to practice. Financial accountants follow gener- ally accepted accounting principles (GAAP) in preparing reports so that stakeholders can compare one com- pany to another. Accounting prin- ciples and concepts develop from research, accepted accounting prac- tices, and pronouncements of au- thoritative bodies. Currently, the Financial Accounting Standards Board (FASB) is the authoritative body having the primary responsi- bility for developing accounting principles. The business entity concept views the business as an entity sep- arate from its owners, creditors, or other stakeholders. The business en- tity limits the economic data in the accounting system to that related di- rectly to the activities of the busi- ness. The cost concept requires that properties and services bought by a business be recorded in terms of ac- tual cost. The objectivity concept re- quires that the accounting records and reports be based upon objec- tive evidence. The unit of measure concept requires that economic data be recorded in dollars. 6 State the accounting equation and define each element of the equation. The resources owned by a business and the rights or claims to these re- sources may be stated in the form of an equation, as follows: Assets ? Liabilities ? Owners Equity 66124_c01_1-46.qxd 11/10/03 6:26 PM Page 23 I K Chapter 1 Introduction to Accounting and Business24 Illustrative Problem Cecil Jameson, Attorney-at-Law, is a proprietorship owned and operated by Cecil Jameson. On July 1, 2005, Cecil Jameson, Attorney-at-Law, has the following assets and liabilities: cash, $1,000; accounts receivable, $3,200; supplies, $850; land, $10,000; accounts payable, $1,530. Office space and office equipment are currently being rented, pending the construction of an office complex on land purchased last year. Business transactions during July are summarized as follows: a. Received cash from clients for services, $3,928. b. Paid creditors on account, $1,055. c. Received cash from Cecil Jameson as an additional investment, $3,700. d. Paid office rent for the month, $1,200. e. Charged clients for legal services on account, $2,025. f. Purchased office supplies on account, $245. g. Received cash from clients on account, $3,000. h. Received invoice for paralegal services from Legal Aid Inc. for July (to be paid on August 10), $1,635. i. Paid the following: wages expense, $850; answering service expense, $250; util- ities expense, $325; and miscellaneous expense, $75. j. Determined that the cost of office supplies on hand was $980; therefore, the cost of supplies used during the month was $115. k. Jameson withdrew $1,000 in cash from the business for personal use. Instructions 1. Determine the amount of owners equity (Cecil Jamesons capital) as of July 1, 2005. 2. State the assets, liabilities, and owners equity as of July 1 in equation form sim- ilar to that shown in this chapter. In tabular form below the equation, indicate the increases and decreases resulting from each transaction and the new balances after each transaction. Explain the nature of each increase and decrease in owners equity by an appropriate notation at the right of the amount. Key Terms account form (21) account payable (15) account receivable (16) accounting (8) accounting equation (13) assets (13) balance sheet (19) business (2) business entity concept (13) business stakeholder (6) business strategy (4) business transaction (14) Certified Public Accountant (CPA) (11) combination strategy (5) corporation (3) differentiation strategy (4) ethics (9) expenses (16) financial accounting (12) Financial Accounting Standards Board (FASB) (12) financial statements (19) generally accepted accounting principles (GAAP) (12) income statement (19) liabilities (13) limited liability corporation (4) low-cost strategy (4) managerial accounting (12) manufacturing business (2) matching concept (19) merchandising business (3) net income (19) net loss (19) owners equity (13) partnership (3) prepaid expenses (15) private accounting (10) proprietorship (3) public accounting (10) report form (21) revenue (16) service business (3) statement of cash flows (19) statement of owners equity (19) unit of measure concept (13) value chain (6) 66124_c01_1-46.qxd 11/10/03 6:26 PM Page 24 Chapter 1 Introduction to Accounting and Business25 3. Prepare an income statement for July, a statement of owners equity for July, and a balance sheet as of July 31, 2005. Solution 1. Assets ? Liabilities ? Owners Equity (Cecil Jameson, capital) $15,050 ? $1,530 ? Owners Equity (Cecil Jameson, capital) $13,520 ? Owners Equity (Cecil Jameson, capital) 2.Assets? Liabilities ?Owners Equity AccountsAccounts Cash? Receivable ? Supplies ?Land?Payable? Cecil Jameson, Capital Bal.1,0003,20085010,0001,53013,520 a.?3,928? 3,928 Fees earned Bal.4,9283,20085010,0001,53017,448 b.?1,055?1,055 Bal.3,8733,20085010,00047517,448 c.?3,700? 3,700 Investment Bal.7,5733,20085010,00047521,148 d.?1,200? 1,200 Rent expense Bal.6,3733,20085010,00047519,948 e.?2,025? 2,025 Fees earned Bal.6,3735,22585010,00047521,973 f.?245?245 Bal.6,3735,2251,09510,00072021,973 g.?3,000?3,000 Bal.9,3732,2251,09510,00072021,973 h.?1,635? 1,635 Paralegal exp. Bal.9,3732,2251,09510,0002,35520,338 i.?1,500?850 Wages exp. ?250 Answ. svc. exp. ?325 Utilities exp. ?75 Misc. exp. Bal.7,8732,2251,09510,0002,35518,838 j.?115?115 Supplies exp. Bal.7,8732,22598010,0002,35518,723 k.?1,000? 1,000 Withdrawal 6,8732,22598010,0002,35517,723 3. Cecil Jameson, Attorney-at-Law Income Statement For the Month Ended July 31, 2005 $5 9 5 3 00 4 4 5 0 00 $1 5 0 3 00 $1 6 3 5 00 1 2 0 0 00 8 5 0 00 3 2 5 00 2 5 0 00 1 1 5 00 7 5 00 Fees earned Operating expenses: Paralegal expense Rent expense Wages expense Utilities expense Answering service expense Supplies expense Miscellaneous expense Total operating expenses Net income (continued) 66124_c01_1-46.qxd 11/10/03 6:26 PM Page 25 S Chapter 1 Introduction to Accounting and Business26 Self-Examination Questions (Answers at End of Chapter) C. a statement of owners equity. D. a statement of cash flows. 4. If total assets increased $20,000 during a period and total liabilities increased $12,000 during the same period, the amount and direction (increase or decrease) of the change in owners equity for that period is: A. a $32,000 increase.C. an $8,000 increase. B. a $32,000 decrease. D. an $8,000 decrease. 5. If revenue was $45,000, expenses were $37,500, and the owners withdrawals were $10,000, the amount of net income or net loss would be: A. $45,000 net income. C. $37,500 net loss. B. $7,500 net income.D. $2,500 net loss. 1. A profit-making business operating as a separate legal entity and in which ownership is divided into shares of stock is known as a: A. proprietorship.C. partnership. B. service business.D. corporation. 2. The resources owned by a business are called: A. assets. B. liabilities. C. the accounting equation. D. owners equity. 3. A listing of a business entitys assets, liabilities, and owners equity as of a specific date is: A. a balance sheet. B. an income statement. Cecil Jameson, Attorney-at-Law Statement of Owners Equity For the Month Ended July 31, 2005 $13 5 2 0 00 4 2 0 3 00 $17 7 2 3 00 $3 7 0 0 00 1 5 0 3 00 $5 2 0 3 00 1 0 0 0 00 Cecil Jameson, capital, July 1, 2005 Additional investment by owner Net income for the month Less withdrawals Increase in owners equity Cecil Jameson, capital, July 31, 2005 $ 2 3 5 5 00 17 7 2 3 00 $20 0 7 8 00 $ 6 8 7 3 00 2 2 2 5 00 9 8 0 00 10 0 0 0 00 $20 0 7 8 00 Cecil Jameson, Attorney-at-Law Balance Sheet July 31, 2005 Assets Cash Accounts receivable Supplies Land Total assets Liabilities Accounts payable Owners Equity Cecil Jameson, capital Total liabilities and owners equity 66124_c01_1-46.qxd 11/10/03 6:26 PM Page 26 C Chapter 1 Introduction to Accounting and Business27 Class Discussion Questions 1. What is the objective of most businesses? 2. What is the difference between a manufacturing business and a service business? Is a restaurant a manufacturing business, a service business, or both? 3. Why are most large companies like Microsoft, Pepsi, Caterpillar, and AutoZone organized as corporations? 4. Both KIA and Porche produce and sell automobiles. Describe and contrast the business strategies of KIA and Porche. 5. Assume that a friend of yours operates a family-owned pharmacy. A Super Wal-Mart is scheduled to open in the next several months that will also offer pharmacy services. What business strategy would your friend use to compete with the Super Wal-Mart pharmacy? 6. How does eBay offer value to its customers? 7. Who are normally included as the stakeholders of a business? 8. What is the role of accounting in business? 9. Deana Moran is the owner of First Delivery Service. Recently, Deana paid inter- est of $3,600 on a personal loan of $60,000 that she used to begin the business. Should First Delivery Service record the interest payment? Explain. 10. On July 10, Elrod Repair Service extended an offer of $100,000 for land that had been priced for sale at $120,000. On July 25, Elrod Repair Service accepted the sellers counteroffer of $112,000. Describe how Elrod Repair Service should record the land. 11. a. Land with an assessed value of $300,000 for property tax purposes is acquired by a business for $500,000. Seven years later, the plot of land has an assessed value of $400,000 and the business receives an offer of $600,000 for it. Should the monetary amount assigned to the land in the business records now be increased? b. Assuming that the land acquired in (a) was sold for $600,000, how would the various elements of the accounting equation be affected? 12. Describe the difference between an account receivable and an account payable. 13. A business had revenues of $280,000 and operating expenses of $315,000. Did the business (a) incur a net loss or (b) realize net income? 14. A business had revenues of $750,000 and operating expenses of $670,000. Did the business (a) incur a net loss or (b) realize net income? 15. What particular item of financial or operating data appears on both the income statement and the statement of owners equity? What item appears on both the balance sheet and the statement of owners equity? What item appears on both the balance sheet and statement of cash flows? 66124_c01_1-46.qxd 11/10/03 6:26 PM Page 27 Chapter 1 Introduction to Accounting and Business28 PREPARE FOR TOMORROW TODAY! Thank you for following in the tradition of 11 million students who have achieved outstanding results using this very text. To help you even further, we have developed incredible resources to make learning accounting even easier. Shop online today by visiting Answer: McDonalds WebTutor Advantage on WebCT or Blackboard with Personal Trainer 3.0 Get the most robust interactive study materials available on the Web! Includes: Automatic and immediate feedback from Pre-Tests, Achievement Tests, Multiple- Choice and True-False Quizzes, and Quiz Bowl. 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Software (formerly General Ledger Software) 0-324-20413-2 This software package teaches you the basics of a computerized accounting system in an easy-to-use environment. You will get hints and tips for completing end-of-chapter problems. You will get immediate feedback to determine if you have done the problems correctly. Study Guide Chapters 1-170-324-20373-X Chapters 12-250-324-20374-8 This guide will give you quiz and test hints. You can practice chapter concepts, learn through numerous multiple choice, fill-in- the-blank, true-false questions, and exercises, and check your answers against the provided solutions. Working Papers for Exercises and Problems Chapters 1-170-324-20375-6 Chapters 12-250-324-20376-4 This supplement contains forms that help you organize your solutions. Working Papers Plus for Selected Exercises and Problems Chapters 1-170-324-23077-2 Chapters 12-250-324-20378-0 This supplement includes selected exercises and problems from the text, along with the forms for your use in solving them. 66124_c01_1-46.qxd 11/10/03 6:26 PM Page 28 E Chapter 1 Introduction to Accounting and Business29 Exercises Indicate whether each of the following companies is primarily a service, merchan- dise, or manufacturing business. If you are unfamiliar with the company, you may use the Internet to locate the companys home page or use the finance Web site of Y . 1. Ford Motor9. CVS 2. Citigroup10. Caterpillar 3. Sears Roebuck11. FedEx 4. AT therefore, $665 of sup- plies had been used during the month. 10. Paid cash to owner for personal use, $1,000. Indicate the effect of each transaction on the accounting equation by listing the numbers identifying the transactions, (1) through (10), in a vertical column, and in- serting at the right of each number the appropriate letter from the following list: a. Increase in an asset, decrease in another asset. b. Increase in an asset, increase in a liability. c. Increase in an asset, increase in owners equity. d. Decrease in an asset, decrease in a liability. e. Decrease in an asset, decrease in owners equity. Mike Renner operates his own catering service. Summary financial data for March are presented in equation form as follows. Each line designated by a number indi- cates the effect of a transaction on the equation. Each increase and decrease in owners equity, except transaction (5), affects net income. EXERCISE 1-9 Asset, liability, owners equity items Objective 7 EXERCISE 1-10 Effect of transactions on accounting equation Objective 7 EXERCISE 1-11 Effect of transactions on acc