1.

Question :

(TCO 1) The Accounting Equation is used to develop the organizations financial reports. (1) Describe what liabilities are (10 points) and (2) provide an example of a liability account. (10 points)
Liabilities also called payables are amounts owed to others. An example of a typical liability may be money that is owed to other employees, providers or suppliers, or the government in form of taxes.

Student Answer:

Instructor Explanation:

Textbook page 13. Liabilities are debts that are payable to creditors. Notes Payable is an example.

Comments:

Not sure you provided an example of a liability account clearly, such as Accounts Payable, Notes Payable.
Short 2 Short False 2

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2.

Question :

(TCO 1) The financial statements present a company to the public in financial terms. (1) Which financial statement identifies the company's financial position at the end of its year of operation (10 points) and (2) explain what information this financial statement provides. (10 points)
Balance sheet (also called the Statement of financial position) which provides Assets = Liabilities + Owner's Equity. Information an investor would want to now about a company before investing.

Student Answer:

Instructor Explanation:

Textbook page 16. Balance Sheet. Provides the balances of the accounting equation accounts.

Comments:
1935485177 0 Short 1935485177

on target...
5 Short False 5

3.

Question :

(TCO 1) The accounting profession follows a set of guidelines for measurement and disclosure of financial information called the Generally Accepted Accounting Principles (GAAP). (1) Explain what the Cost Principle is (10 points) and (2) provide an example of its application. (10 points)
"The cost principle says that all transactions are recorded at their actual verifiable cost." Harrison, Walter T., Thomas, Charles T. Horngren and Bill (). Financial Accounting [8] (VitalSource Bookshelf), Retrieved from http://online.vitalsource.com/books/9781256083368/id/ch01lev2sec6 For example if a Gym buys a used stairmaster for $1000 from another gym

Student Answer:

that is going out of business, even though that same stairmaster is worth $4000, the new gym must record the actual cost as $1000 since that is what they paid for the equipment. Instructor Explanation:

Textbook page 9. States that assets should be recorded at their actual cost. Any long-term asset purchase could be an example.

Comments:
1935485178 0 Short 1935485178

Going forward do NOT copy and paste....

4.

Question :

(TCO 2) Transaction analysis results in the development of a journal entry. A building is purchased for $35,000. (1) Name the accounts impacted and how using the format account name/debit or credit/dollar amount (10 points) and (2) explain how the Accounting Equation is impacted. (10 points)
Accounts Payable $35,000/credit Cash ($35,000)/debit The accounting equation is impacted on both asset side by adding a building and under the owners/shareholders equity side by adding amounts invested by the owners and the amount of profits that have been retained.

Student Answer:

Instructor Explanation:

Textbook page 68. Building/Debit/$35,000 and Cash/Credit/$35,000. Assets are increased and decreased by the same amount so the Accounting Equation is in balance.

Comments:

If you used cash, then your Cash decreases, since Cash is a debitbalance account you would credit Cash $35,000 and you would increase your assets, specifically Building, which would be debited $35,000. In this case your assets increase and decrease by the same amount....equity is NOT affected and there is nothing in the problem about "profits". Need to review transaction analysis and rules of debit and credit.
Short 1935485179 11 Short False 11

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5.

Question :

(TCO 3) Adjusting Entries are required at the end of the period to ensure that accrual accounting principles are applied. The rent was prepaid for three months at $1,000 per month. Develop the adjusting entry for the end of the period reflecting that one month of rent has been consumed. (1) Name the accounts impacted and how using the format account name/debit or credit/dollar amount (10 points) and (2) explain how the Accounting Equation is impacted. (10 points)

Student Answer:

Prepaid Rent $3,000/credit Prepaid Rent ($1,000)/debit Rent expense $1,000/credit Accounting Equation is impacted within the liability side by including rent as a payable item which pulls from the asset side of the prepaid rent item as an asset.

Instructor Explanation:

Textbook page 144. Rent Expense/Debit/$1,000 and Prepaid Rent/Credit/$1,000. Assets and Owners' Equity increase and the Accounting Equation is in balance.

Comments:

This was discussed in the discussion for week 3. after one month, Rent Expense is DEBITED and PrePaid Rent is CREDIT -- both by $1,000.

1.

Question :

(TCO 5) Internal Controls are required to safeguard assets and to ensure ethical business practices. (1) Identify and explain the reason for any two of the five components of internal control (10 points) and (2) provide examples of how your two selected components of internal control will meet the goal of safeguarding assets and promoting ethical business practices. (15 points)
Internal controls help companies protect the organizations assets and provide accurate information for accounting and record keeping. Risk assessment involves the awareness of areas of risk and identifies areas that are important to controlling them. Managers and accountants usually have a high regard for keeping these internal controls even though some companies have made themselves examples of how not to operate within those set boundaries like the famous Enron cases which help institute new regulations of such controls initiated by the Sarbanes-Oxley Act of 2002. "SOX made the responsibility for internal controls more defined and compliance-based" [Harrison, Walter T., Thomas, Charles T. Horngren and Bill (). Financial Accounting [8] (VitalSource Bookshelf), Retrieved from http://online.vitalsource.com/books/9781256083368/id/ch04box01] There are now sets of control procedures are all techniques and processes designed to control risks. This process is a great example of how the health care industry is now reimbursed by insurers and CMS (Center for Medicaid services) that their participants are being treated correctly and that the Facilities issuing those care procedures are internally monitoring their compliance with regulations that they must abide within. Employees should be competent, reliable, and ethical. This principle includes being sure that our employees have the necessary skills to complete the jobs required at the appropriate level of competence, and includes crosstraining employees to provide good coverage when needed due to illness or vacations.

Student Answer:

Instructor Explanation:

Textbook page 238/239 and Exhibit 4-4. The five components are Control environment, Risk assessment, Information system, Control procedures, and Monitoring of controls. Examples will probably come from graded discussions.

Comments:

Nice work on one of the components Risk Assessment, but the question asked for TWO. Again, avoid copy and paste on the final, for I will not accept it.
Essay 1935485181 1 Essay False 1

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2.

Question :

(TCO 5) The bank account as a control device that helps to protect cash. One of the requirements is to conduct periodic bank statement reconciliations. Using the following data, complete the bank statement reconciliation for Acorn Plumbing, Inc. (Use the format shown on page 255 of your textbook) (25 points) The bank statement indicated a service charge of $56. Acorn made a deposit on May 31, but this deposit did not appear on the bank statement, $1,451. A credit memo in the bank statement indicated a bank collection of a note for $1,300 with interest received of $16. This item was dated May 18. Also included in the bank statement was a debit memo for a NSF check for $314 from Barney Smythe. Checks #1406 for $1,342, #1610 for $1,609, and #1825 for $857 were written by Acorn and sent to the respective companies, but these checks do not appear on the bank statement. The balance on the bank statement as of May 31 was $13,119. The Cash account on Acorns books showed an amount of $9,816.

Student Answer:

ACORN Bank Statement Reconciliation May 31 BANK: Balance on May 31 was $13,119 Add: deposit on May 31, did not appear statement, $1,451 Less: Outstanding Check #1406 for ($1,342) Less: Outstanding Chesk #1610 for ($1,609) Less: Outstanding Check #1825 for ($857) Balance: $10,762 BOOK: Balance on May 31 was $9,816 Less: The bank statement indicated a service charge of ($56) Less: bank statement debit for NSF check for ($314) Add: Credit on May 18, bank statement bank collection of $1,300 Add: interest received of $16 Balance: $10,762

Instructor Bank Reconciliation for Acorn Plumbing, Inc. for May 31, 201X Explanati $9,81 on: Balance per book 6 Balance per bank

$13,1 19

ADD: Note receivable collection Interest revenue LESS: NSF check--Barney Smythe Bank service charge Adjusted book balance

1,300 16

ADD: Deposits in transit 1,316 LESS: Outstanding checks: 1406 1610 1825

1,451

314 56

370 $10,7 62

1,342 1,609 857 3,808

Adj. bank balance

$10,7 62

Comments:

Great!!