Accounting Discussion Questions example

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Accounting Discussion Questions

Discussion Questions 1

The main objective of most business is to maximize their profits.

Stakeholder of a business could be any party that has an interest or an interaction to this particular business; Stakeholders from inside the business are called internal such as employees, managers and shareholders. Stakeholders from outside the business are called external stakeholders, Investors, partners, suppliers and local community in which business is operating are few examples of this category

In general, the role of accounting is to asset stakeholders to make efficient business decisions by providing them with accurate financial information.

Objectivity and independence, honesty and due care.

Private accounting is focused on internal workings of businesses and organizations, while public accounting provides auditing and tax consulting services to external clients.

No because Fast Delivery Service is a separate entity, payments done by the owner regarding education fees are not commercial operations related to this business.

Debit Equipment $97,500

Credit Cash or bank account $97,500

A. The offered value has no impact on the amounts entered into the financial records as no actual transaction was made

The overall effect of the sale of the land would be to increase assets by $50,000 and to increase owner's equity by $50,00

Assets, liabilities and owner equity, where,

Assets = Liabilities + Owner Equity

Accounts payable represent the amounts that business owes as a result of purchasing goods or services on credit from suppliers. Accounts receivable represent business right to collect owed resulted of selling goods or services on credit to customers. Accounts payable are liabilities. Accounts receivable are assets.

Net Profit/Loss = Revenue – Operating Expenses

Net Profit/Loss = $130,000 - $145,000 = -$15,000 (Loss)

Net Profit/Loss = Revenue – Operating Expenses

Net Profit/Loss = $280,000 - $270,000 = $10,000 Profit

Revenue and investment.

Statement of comprehensive income aggregates income statement (profit and loss statement) and other comprehensive income which isn't reflected in profits and losses.

The statement of financial position shows the company’s assets, liabilities and shareholder equity.

Statement of comprehensive income: Periodic (covers a period of time)

The statement of financial position: Specific date


Discussion Questions 2

An account is a form designed to record changes in a particular asset, liability, stockholders’ equity, revenue, or expense. A ledger is a group of related accounts.

The usual sequence of steps is: analyzing each transaction, enter the transaction in the journal, and then transfer the information to the ledger accounts. The order of accounts in general ledger are as following:

Assets

Liabilities

Owner’s capital

Drawing

Revenue

Expenses

Both debit and credit can signify an increase and a decrease, depending upon the nature of the account. For example, debits signify an increase in asset and expense accounts but a decrease in liability, capital stock, retained earnings, and revenue

Accounts. Owner equity: Decrease

Expense account: Increase (balance is debt)

Owner equity: Increase

Revenue: Increase

Business transaction is authorized

Business transaction occurs

Business document is prepared

Entry is recorded in journal

Entry is posted to ledger

Locate the account number 41, credit it for 3020, add date and Ref

Post reference number

A. The revenue was earned in October.

B. (1) Debit Accounts Receivable and credit Fees Earned account in October.

(2) Debit Cash and …

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