Assignment 1 STUDENTS VERSION BM270120B 410-

015-MM_ Accounting

Ch. 1
From Pearson Book and Solutions Manual Guideline p.35
1. A withdrawal is a business expense. True or false? Please explain.

2. As expenses increase and revenue remains the same, they cause

owner’s equity to increase. Defend or reject this statement.

3. What does an income statement show?

4. The statement of owner’s equity calculates only ending

withdrawals. True or false? Please explain.

5. Paul Kloss, accountant for Lowe & Co., travelled to Vancouver on

company business. His total expenses came to $350. Paul felt that
since the trip extended over the weekend, he could pad his expense
account with an additional $100 of expenses. After all, weekends
represent his own time, not the company’s. What would you do?
Write your specific recommendations to Paul.
Classifying Accounts
1.  CDE1. Classify each of the following items as an asset (A), liability (L),
or part of owner’s equity (OE):

The Accounting Equation

1.  CDE2. Complete the following using the terms from the accounting
equation or accounting categories:

a.              are rights of the creditors.

b.              are the total value of items owned by a

business.

c.                           are promises (often unwritten)

to pay creditors.
Exercises Set B
1. E1-1B. Use the fundamental accounting equation to find the missing element
in each of the following:

a. A=?L=$4,200OE=$7,100A=?L=$4,200OE=$7,100
b. A=$18,000L=$6,600OE=?
A=$18,000L=$6,600OE=?
c. A=$21,000L=$8,000OE=?
A=$21,000L=$8,000OE=?
d. A=$7,500L=?OE=$4,000A=$7,500L=?OE=$4,000
e. A=?L=$5,800OE=$9,470A=?L=$5,800OE=$9,470
f. A=$17,600L=?OE=$12,000
E1-2B. Give an example of a business transaction that has each of the following effects on the
accounting equation:

1. Increases an asset and increases a liability

2. Increases one asset and decreases another asset

3. Decreases an asset and decreases owner’s equity

4. Decreases an asset and decreases a liability

5. Increases an asset and increases owner’s equity

E1-3B. Identify at least four main areas of accounting for accounting professionals. For each
accounting area, identify at least three accounting-related opportunities in practice.
 E1-4B. Record the following transactions in the expanded accounting equation. The running
balance may be omitted for simplicity.

A. B. Bell invested $40,000 in Bell’s Computer Company.

B. Bought computer equipment on account, $8,000.

C. Paid personal telephone bill from company bank account, $150.

D. Received cash for services rendered, $12,000.

E. Billed customers for services rendered for the month, $25,000.

F. Paid current rent expense, $3,000.

G. Paid supplies expense, $900.

E1-5B. From the following account balances for June 2022, prepare in proper form (a) an
income statement, (b) a statement of owner’s equity, and (c) a balance sheet for French Realty.
  P1-1A. Mia Anabelle, who lives in Winnipeg, decided to open Mia’s Nail Spa. Mia
completed the following transactions: P. 40 Book

A. Invested $20,000 cash from her personal bank account into the business.

B. Bought equipment for cash, $4,000.

C. Bought additional equipment on account, $6,000.

D. Paid $1,000 cash to reduce what was owed from Transaction C.

Based on the above information, record these transactions in the basic accounting equation.

Check Figure Total Assets $25,000