Admas University: Answer Sheet

Admas University
TMA (Tutorial Marked Assignment) for the course of principles of Accounting I

Answer sheet
Part One
1. Internal users of accounting

These are persons that are directly involved in managing and operating one organization.
These includes:
 Managers
 Other important decision makers
Internal role of accounting is to provide information to help the efficiency and
effectiveness of an organization.
Internal reports are like:
 Manufacturing cost per product
 Profitable service activities
 Breakeven level of sales.
External users of accounting
These are parties which are not directly involved in running the business enterprise.
These includes:
 Lenders/Creditors
 Shareholders
 Employee and labor unions
 Government/regulatory bodies
External reports are like:
 Lenders include banks, mortgage look for information to help them assess them
the ability of borrows to repay their depts.
 Government requires to prepare financial report in order to compute taxes.
2. Accounting is an information and measurement system that identifies, records and
communicates relevant, reliable and comparable information about an organization
economic activities. The activities involved in the process are:
 Identifying- involves selecting those events that are considered evidences of
economic activities relevant to particular organization.
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 Recording- consists of keeping a chronological diary of measured events in an
orderly and systemic manner.
 Communicating- the information is communicated through the preparation and
distribution of accounting reports to interested users.
3. Business entity concepts
 Is any business organization such as supermarket, laundry and hotels which are
exists as an economic unit has a separate existence from its owners, creditors,
employees and customers for the purpose of accounting records.
 The business entity should have a completely separate set of records and its
financial records and reports should refer only about the business enterprise.
 The activities of each business are kept separately from each other and from the
owners personal records.
4. Work sheet is used to prepare the unadjusted trial balance, to assign the adjusting entries
to correct accounts and then to prepare preliminary financial statement. Income statement
is a financial statement that summarizes the amount of revenues earned and expenses
incurred. Income statements reports the profitability of the business by comparing
revenues and expenses for stated period of time.
In accounting, profitability is measured for a period of time than on a daily basis.
Net income (profitability) is when revenue is greater than expenses.
Net loss (unprofitable) is when revenue is less than expenses.
5. –Special journals(Not used in computerized accounting system) is specialized journal
which is used in a manual accounting or bookkeeping system to reduce the tedious task
of recording both the debit and credit general ledger account names and amounts in a
general journal.
Example: sales journal for a company’s sales merchandise to customers that are allowed
to pay at a future date
-Account receivable control account or sales ledger control account (Not used in
computerized accounting system) is an account used to record summary transactions
relating to accounts receivable. Account receivable control account is a typical
bookkeeping system.
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The two main transaction types for accounts receivable are credit invoice sales
transactions, and the receipt of cash from customers.
-Electronic invoice form (Used in computerized accounting system) is sent electronically
over the internet, rather than being paper based, and can be easily integrated into a
customer’s accounts payable system.
-Month-end posting to the general ledger (Used in computerized accounting system) is an
accounting procedures undertaking at the end of the month to close out the current
posting period. Types of accounting procedures addressed in the month-end closing can
include depreciating fixed assets, posting billing documents and payroll.
6. A subsidiary ledger is a group of related accounts showing the details of the balance of
general ledger accounts. Subsidiary ledgers are used to relieve the general ledger of a
mass detail.
Examples:
 Accounts receivable subsidiary ledger
 Accounts payable subsidiary ledger
 Equipment subsidiary ledger.
7. Gross Profit= (Merchandise Sold On Cash +Merchandise sold On Account)-Merchandise
sold
Gross Profit= ($86,000+$93,950)-$76,240
Gross Profit= $103,710
8. Adjusted trial balance of Brock Pool service Company of the December 31, 2010
a. Taylor Brock, Capital…………………..Owners’ Equity Section
b. Accumulated Depreciation……………..property, plant, and equipment
c. Unearned Revenues……………………Current Liabilities
d. Mortgage Payable………………………Long-term Liabilities
e. Equipment…………………………..…Non-current Assets
f. Notes payable(due in 2012)………....….Long term Liabilities
g. Cash……………………………………Current Assets
h. Account receivable……………………Current Assets
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9. Given:
After the accounts have been adjusted at January 31, 2014, the end of the fiscal year, the
following balances are taken from the ledger:
Hope Taylor, Capital $348,000

Hope Taylor, Drawing 5,000
Fees Earned 124,600
Wages Expense 29,000
Rent Expense 43,000
Supplies Expense 7,300
Miscellaneous Expense 5,700
Answer: Closing Entries
Closing Entries
Jan. 31 Fees Earned 124,600
Income Summary 124,600
31 Income Summary 85,000

Wages Expense 29,000
Rent Expense 43,000
Miscellaneous Expense 5,700
31 Hope Taylor, Capital 39,600
Income Summary 39,600
31 Hope Taylor, Capital 5,000
Hope Taylor, Drawing 5,000
10. Steps in accounting cycle
1. Adjustment data are assembled and analyzed
2. Transactions are analyzed and recorded in the journal
3. Transactions are posted to the ledger
4. An unadjusted trial balance is prepared
5. Adjusting entries are journalized and posted to the ledger
6. An optional end-of-period spreadsheet(work sheet) is prepared
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7. An adjusted trial balance is prepared
8. Financial statements are prepared
9. Closing entries are journalized and posted to the ledger
10. A post-closing trial balance is prepared
11. Income summary
1. Utilities Payable…………………………..n/a
2. Utilities Expense………………………….Closed
3. Supplies……………………………………n/a
4. Supplies Expense………………………….Closed
5. Fees Earn…………………………………..Closed
6. Unearned Fees……………………………..n/a
7. Account Receivable………………………..n/a
8. Jason Hill, Drawing………………………..Closed
9. Jason Hill, Capital………………………….Closed
10. Accumulated Depreciation- Equipment……n/a
11. Equipment………………………………….n/a
12. Prepaid Insurance…………………………..n/a
13. Insurance Expenses…………………………Closed
12. Given: Adjusted trial balance of the worksheet
Accumulated Depreciation $32,000

Fees Earned 78,000
Depreciation Expense 7,250
Rent Expenses 34,000
prepaid Insurance 6,000
Supplies 400
Supplies Expenses 1,800
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Answer: An income statement
Finnegan Co.
Income Statement
For the Month Ended April 30, 2010
Revenues
Fees Earned 78,000
Expenses
Rent Expenses 34,000
Depreciation Expense 7,250
Total Expenses 43,050
Net Income 34,950
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Admas University

TMA (Tutorial Marked Assignment) for the course of principles of Accounting I

1. Internal users of accounting

Hope Taylor, Capital $348,000

31 Income Summary 85,000

Accumulated Depreciation $32,000

Answer: An income statement

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