BUS3061 Fundamentals of Accounting Student’s name: Institutional affiliation: Answer 1 Proficient To begin with reviewing adjusting entries in the previous accounting period is crucial. The step that follows is an intensive review of account titles as indicated in the trial balance. In addition examining and reviewing source documents would aid in recovery of unrecorded assets revenues liabilities and expenses CITATION Her11 \l 1033 (Hermanson Edwards & Maher 2011). The final step would be to inquire from the manager and some employees on whether services performed or received in months beforehand have been billed as required. It would assist in establishing outstanding debits as well as credits. Distinguished It leads to inaccuracies in representing the values of its immediate short-term debts CITATION Her11 \l 1033 (Hermanson Edwards & Maher 2011). Basically its components are two terms – current assets and current liabilities. Its calculation is current assets/ current liabilities. It depicts liquidity. An objective is to keep it above 1. When it is at such a level the management is assured that short term contingencies are met since short term obligations are met easily. Distinguished 2013 2014 Current ratio $262 500/ $150 000 = 1.75 $310 500/ $172 500 = 1.8 It indicates a favorable trend since Fortson Company is more liquid. Reference BIBLIOGRAPHY Hermanson Edwards & Maher. (2011). Accounting Principles: A Business Perspective Financial Accounting. Homewood IL: Richard D Irwin. [...]
BUS3061-AL-U03D1 U03A1 U03A2 SECTION 1,2,3, &4 SECTION #3 [u03a1] Unit 3 Assignment 1 Adjustments for Financial Reporting This assignment will familiarize you with the need for adjusting entries. After completing this assignment, you will understand: • The difference between the cash and accrual bases of accounting. • The concept of adjusting entries and how they are prepared. • How to classify adjusting entries. • The concept of asset depreciation and its effect on book values. Instructions Respond to the following questions or problems using grammatically correct language and appropriate APA citations. To achieve a proficient grade in this assignment, answer the proficient-level queries for each question. To achieve a distinguished grade, answer both sets of queries for each question. 1. Question 1: o Proficient: Describe the basic characteristics of the cash basis and the accrual basis of accounting. How are revenues and expenses reported on the income statement under the cash basis of accounting and the accrual basis of accounting? o Distinguished: What differences exist when assets, liabilities, and equities are recorded under each of the two bases of accounting? 2. Question 2: o Proficient: Which events during an accounting period trigger the recording of normal journal entries and which event triggers the making of adjusting entries? Please explain why adjusting entries are necessary at the end of an accounting period. o Distinguished: Identify the four different types of adjusting entries frequently required at the end of an accounting period. 3. Question 3: o Proficient: Give an example of an adjusting journal entry for each of the following transactions. Provide three correct responses: Equal growth of an expense and a liability. Earning of revenue that was previously recorded as unearned revenue. Equal growth of an asset and revenue. Increase in an expense and decrease in an asset. o Distinguished: Give an example of an adjusting journal entry for each of the transactions. Provide four correct responses. 4. Question 4: o Proficient: Classify the following items as (a) prepaid expense, (b) unearned revenue, (c) accrued revenue, or (d) accrued expense. Provide six or seven correct responses: A three-year premium paid on a fire insurance policy. Fees earned but not yet received. Fees received but not yet earned. Salary owed but not yet paid. Subscriptions received in advance by a magazine publisher. Supplies on hand at the end of an accounting period. Taxes owed but payable in the following accounting period. Utilities owed but not yet paid. o Distinguished: Classify the items mentioned as (a) prepaid expense, (b) unearned revenue, (c) accrued revenue, or (d) accrued expense. Provide eight correct responses. 5. Question 5: o Proficient: Describe the difference between depreciation expense and accumulated depreciation. Describe the formula used for computing the straight line depreciation for a depreciable asset. Explain how to calculate an asset's book value. o Distinguished: The balance in the equipment account is $1,375,000, and the balance in the accumulated depreciation—equipment account is $725,000. What is the book value of the equipment and does that amount mean that the equipment has a loss in real value of $725,000? Explain your response. Write your responses in a Microsoft Word document and submit it as an attachment in the assignment area. Prior to submitting your assignment, review the Adjustments for Financial Reporting Scoring Guide to ensure you have met all of the requirements and as a self-assessment of your work. Be sure to address the questions at the proficient and distinguished levels to achieve the highest grade possible. Note: Your instructor may also use the Writing Feedback Tool to provide feedback on your writing. In the tool, click the linked resources for helpful writing information. SECTION #4 [u03a2] Unit 3 Assignment 2 Completing the Accounting Cycle This assignment will familiarize you with the remaining steps in the accounting cycle. After completing this assignment, you will understand: • How to use the worksheet to summarize and complete the accounting cycle steps. • The purpose and steps in the closing process at the end of an accounting period. • How a classified balance sheet is prepared. • How to use the current ratio as a tool for financial analysis. Instructions Respond to the following questions or problems using grammatically correct language and appropriate APA citations. To achieve a proficient grade in this assignment, answer the proficient-level queries for each question. To achieve a distinguished grade, answer both sets of queries for each question. 1. Question 1: o Proficient: You have taken over a set of accounting books for a small business as a part-time job. At the end of the first accounting period, you have partially completed the work sheet by entering the proper ledger accounts and balances in the Trial Balance columns. You turn to the manager and ask, "Where is the list of additional information I can use in entering the adjusting entries?" The manager indicates there is no such list. In all the text problems you have done, you have always been given this information. How would you obtain the information for this real-life situation? o Distinguished: What are the consequences of not making all of the required adjustments at the end of the accounting period? 2. Question 2: o Proficient: After the Adjusted Trial Balance columns of a work sheet have been totaled, which account balances are extended to the Income Statement columns, the Statement of Retained Earnings columns, and the Balance Sheet columns? o Distinguished: Describe how is the statement of retained earnings prepared. 3. Question 3: o Proficient: Describe, in order, the four basic steps in the closing process performed at the end of each accounting period. Explain why the closing process is so important. o Distinguished: After the closing process has been completed, what account types remain open? 4. Question 4: o Proficient: Describe how a classified balance sheet is different from a basic unclassified balance sheet. List the major categories of accounts that would appear under assets, liabilities, and stockholder's equity on a classified balance sheet. o Distinguished: Rearrange the following steps in the accounting cycle in proper order: Financial statements are prepared. An adjusted trial balance is prepared. Adjustment data are assembled and analyzed. Adjusting entries are journalized. Closing entries are journalized and posted to the ledger. An unadjusted trial balance is prepared. Transactions are posted to the ledger. Transactions are analyzed and recorded in the general journal. An optional end-of-period work sheet is prepared. A post-closing trial balance is prepared. 5. Question 5: o Proficient: Describe how the current ratio is used to analyze financial results? What are the components of the ratio and how is the ratio calculated? What does the ratio indicate regarding a company's financial position? o Distinguished: Current assets and current liabilities for the Fortson Company are: Current assets: 2013—$262,500; 2014—$310,500. Current liabilities: 2013—$150,000; 2014—$172,500. Determine the current ratio for 2013 and 2014. Does the change in the current ratio from 2013 to 2014 indicate a favorable or unfavorable trend? Write your responses in a Microsoft Word document and submit it as an attachment in the assignment area. Prior to submitting your assignment, review the Completing the Accounting Cycle Scoring Guide to ensure you have met all of the requirements and as a self-assessment of your work. Be sure to address the questions at the proficient and distinguished levels to achieve the highest grade possible. Note: Your instructor may also use the Writing Feedback Tool to provide feedback on your SECTION #1 [u03d1] Unit 3 Discussion 1 Financial Statement Terminology: Income Statement For this discussion, you are going to have your final language of business lesson. In your Dictionary of Accounting Terms e-book: • Locate six terms that you consider to be associated with the income statement (revenues and expenses). • Define each term, and explain why it should be included as a revenue or expense in a business organization. Submit your initial post in this discussion by midnight on Wednesday of this week. Refer to the Discussion Participation Scoring Guide for expectations on the post. SECTION #2 Response Guidelines From the perspective of an external stakeholder (creditor), respond to the posts of at least two of your fellow learners with questions or issues they did not address in their original discussion. • Critically evaluate the accounting terms they chose, their definitions, and reasons why they were included in each category. • Identify other issues that might not have been considered. Post your responses by midnight on Sunday of this week. Resources • Discussion Participation Scoring Guide. • Dictionary of Accounting Terms.