Scribd Logo
Upload

Welcome to Scribd!

  • 35 views

    READ: Chapter 3 (Pages 3-20 - 3-37) Objectives 6-10 Questions

    Uploaded by

    Asfawosen Dingama
    This document provides a class preparation assignment on chapter 3 of Intermediate Accounting I, which covers reviewing a company's accounting system. It includes questions about the order of preparing financial statements, the purpose of closing entries, the closing entry process, the differences between sales/purchase returns, allowances, and discounts, the purpose of a worksheet, reversing entries, special ledgers for accounts receivable and payable, and common types of special journals. Students are assigned to read the relevant chapter sections and answer the provided questions, and complete selected end-of-chapter problems.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    READ: Chapter 3 (Pages 3-20 - 3-37) Objectives 6-10 Questions

    Uploaded by

    Asfawosen Dingama
    35 views2 pages
    This document provides a class preparation assignment on chapter 3 of Intermediate Accounting I, which covers reviewing a company's accounting system. It includes questions about the order of preparing financial statements, the purpose of closing entries, the closing entry process, the differences between sales/purchase returns, allowances, and discounts, the purpose of a worksheet, reversing entries, special ledgers for accounts receivable and payable, and common types of special journals. Students are assigned to read the relevant chapter sections and answer the provided questions, and complete selected end-of-chapter problems.

    Original Description:

    Solved

    Original Title

    docx (1)

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document provides a class preparation assignment on chapter 3 of Intermediate Accounting I, which covers reviewing a company's accounting system. It includes questions about the order of preparing financial statements, the purpose of closing entries, the closing entry process, the differences between sales/purchase returns, allowances, and discounts, the purpose of a worksheet, reversing entries, special ledgers for accounts receivable and payable, and common types of special journals. Students are assigned to read the relevant chapter sections and answer the provided questions, and complete selected end-of-chapter problems.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    35 views2 pages

    READ: Chapter 3 (Pages 3-20 - 3-37) Objectives 6-10 Questions

    Uploaded by

    Asfawosen Dingama
    This document provides a class preparation assignment on chapter 3 of Intermediate Accounting I, which covers reviewing a company's accounting system. It includes questions about the order of preparing financial statements, the purpose of closing entries, the closing entry process, the differences between sales/purchase returns, allowances, and discounts, the purpose of a worksheet, reversing entries, special ledgers for accounts receivable and payable, and common types of special journals. Students are assigned to read the relevant chapter sections and answer the provided questions, and complete selected end-of-chapter problems.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Class Preparation Assignment (CPA)

    ACC2200 – Intermediate Accounting I


    Chapter 3 – Review of a Company’s Accounting system

    CPA #3

    READ: Chapter 3 (Pages 3-20 – 3-37); Objectives 6-10

    QUESTIONS:

    1. In what order are the financial statements prepared? 1 – Adjusted trial balance; 2 –
    Income statement; 3 – Balance sheet; 4 – Cash flows. Why is it necessary for there to be
    a specific order or preparation?

    2. Why are closing entries prepared and processed? To reduce the balance in each
    temporary (periodic) account to zero, and to update the Retained Earnings account.

    3. Briefly describe the closing entry process. In closing, temporary income statement
    accounts with credit balances are debited and accounts with debit balances are credited.
    The total of the credits to these accounts is debited to a temporary closing account called
    Income Summary, and the total of the debts is credited to Income Summary. A resulting
    credit balance in the Income Summary account is the net income for the period. This
    credit balance is closed to zero with a debit to Income Summary and a credit to Retained
    Earnings. If there is a debit balance in Income Summary, there is a net loss for the period.
    This debit balance is debited to Retained Earnings and credited to Income Summary.
    Finally, the Dividends account is credited, and Retained Earnings is debited.

    4. What is the difference between a sales return, sales allowance and sales discount?
    Sales return – when a customer returns merchandise and receives a refunds; Sales
    allowance – when a customer agrees to keep damaged merchandise and the company
    refunds a porting of the selling price; Sales discount – the difference between the original
    selling price of a service/good and the amount that a customer pays (within the discount
    period).

    5. What is the difference between a purchase return, purchase allowance and purchase
    discount? Purchase return – when the company returns inventory to its supplier and
    receives a refund of the purchase price; Purchase allowance – when the company agrees
    to keep damaged inventory and receives a refund from its supplier; Purchase discount –
    discount on credit sales for prompt payment within a discount period.

    6. What is the purpose of a worksheet? To minimize errors, simplify recording of


    adjusting and closing entries in the general journal, and make it easier to prepare the
    financial statements. What is a worksheet NOT? It’s not a substitute for any accounting
    records or financial statements; it is merely a working paper designed for these purposes.

    7. Briefly describe the purpose of reversing entries? Simplify the recording of


    subsequent transactions related to the adjusting entry. It enables a company to routinely
    record the subsequent transactions without having to consider the possible impact of the
    prior adjusting entry.

    8. Most companies typically have special ledgers for accounts receivable and accounts
    payable? Yes, but they are separate for accounts receivable and accounts payable. What is
    the purpose of these special ledgers? They enable a company to focus specifically on the
    collection and payment process for the receivables and payables.

    9. What are the four most common types of special journals? Sales journal, purchases
    Journal, Cash Receipts Journal, and Cash Payments Journal.

    10. When are revenues and expenses recorded under cash-basis accounting? A company
    records revenues when it collects cash from sales and records expenses when it pays cash
    for its operations.

    PROBLEMS:

    E3-9
    E3-10
    E3-13

    You might also like