College of Administrative and Financial Sciences

Assignment 1
Deadline: 8/10/2022@ 23:59

Course Name:Principles of Accounting Student’s Name: SHOUQ ALMUTAIRI

Course Code: ACCT 101 Student’s ID Number: s210050532

Semester: 1 CRN: 14433

Academic Year: 1444/1445 H

For Instructor’s Use only

Instructor’s Name: Abdulaziz Almulhim

Students’ Grade: / 15 Level of Marks: High/Middle/Low

Instructions – PLEASE READ THEM CAREFULLY

 The Assignment must be submitted on Blackboard (WORD format only) via
allocated folder.
 Assignments submitted through email will not be accepted.
 Students are advised to make their work clear and well presented; marks may be
reduced for poor presentation. This includes filling your information on the cover
page.
 Students must mention question number clearly in their answer.
 Late submission will NOT be accepted.
 Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
 All answered must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism).
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 Submissions without this cover page will NOT be accepted.

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Assignment Question(s): (Marks15)
Q1. On your own words, outline the accounting principles and assumptions and
explain each one.
(Marks5)

Q2. What is the accounting cycle? Explain every step starting from analyzing
transactions to preparing post-closing trial balance. (Marks5)

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Q3. Based on the following trial balance for ABC Co, prepare an income statement, statement of
retained earnings and a balance sheet. The company made no additional investments in the company
during the year. (Marks5)
ABC Co.
Trial Balance
December 31
Cash SR 6,500
Accounts receivable 475
Supplies 2,500
Equipment 17,000
Accounts payable SR 745
Common stock 10,000
Retained earnings 11,155
Dividends 36,000
Revenue earned 72,000
Supplies expense 3,425
Rent expense 6,000
Wages expense 22,000
Totals SR93,900 SR93,900

  

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Q1) Accounting principles and assumptions are the basic guidelines for preparing financial
statements. These also:

1. Going concern principle:

This principle states that a company must continue to operate for the foreseeable future. This
assumption allows the company to use accrual accounting. Revenues and expenses are recognized as
earned or incurred, rather than when cash is received or paid. 2. Assumptions about stable currency
units:

This assumption states that the value of money is stable over time. This assumption allows
companies to use the historical cost of acquiring transactions at the original price instead of the
current market price.

3. Cost principle:

This principle states that businesses should only record transactions at past cost. This assumption
prevents companies from recording inflated or deflated deals. 4. Full Disclosure Principle:

This principle states that companies must disclose all relevant information to investors and creditors.
This premise gives investors and creditors access to all the information they need to make well-
informed decisions.

Five. Good principle:

This principle dictates that businesses should aggregate revenues and expenses in the same
accounting period. This assumption allows companies to report accurate financial statements.

The going concern principle is the principle that a company must continue to exist for the time being.
This assumption allows the company to use accrual accounting. Revenues and expenses are
recognized as earned or incurred, rather than when cash is received or paid. The assumption that
currency units are stable indicates that the value of money is stable over time. This assumption
allows companies to use the historical cost of acquiring transactions at the original price instead of

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the current market price. The historical cost principle states that companies should only record
transactions at historical cost.
This assumption prevents companies from recording inflated or deflated deals. The full disclosure
principle states that companies should disclose all relevant information to investors and creditors.
This premise gives investors and creditors access to all the information they need to make well-
informed decisions. The matching principle states that companies should match their income and
expenses for the same accounting period. This assumption allows companies to report accurate
financial statements.

Q2:
What is a accounting cycle? We walk you through each step, from breaking down your exchanges to
making a counterfeit monetary record in the wake of shutting. Furthermore, I'll make sense of every
one with an alternate definition in 5 definitions. (I believe that you should have 5 definitions as
would be natural for you)
The bookkeeping cycle is the method involved with recording, characterizing, and summing up
monetary exchanges to deliver budget summaries. The cycle starts with the examination of the
exchange and finishes with the formation of the preliminary equilibrium after consummation. A
charging cycle incorporates the accompanying advances:

Examine your exchanges:

This step audits exchanges and figures out which exchanges ought to be kept in the bookkeeping
records.
Exchange record:
This step includes entering the exchange into the bookkeeping record.
Order your exchanges:
In this step, you characterize your exchanges into gatherings.
Sum up the exchange:
This step incorporates the readiness of a monetary report summing up the exchanges for the period.
Formation of preliminary monetary record subsequent to shutting:
This step makes a record proclamation that rundowns all record adjusts after the posting is finished.
Bookkeeping standards are the guidelines and norms that organizations and different associations
should consent to while announcing monetary information. By normalizing the language and
techniques that bookkeepers should utilize, these guidelines work with the confirmation of monetary
information.

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Q3)
ABC Co.
Trial Balance
December 31
Debit Credit
Cash 6,500.00
Accounts
receivable 475.00
Supplies 2,500.00
Equipment 17,000.00
Accounts payable 745.00
Common stock 10,000.00
Retained earnings 11,155.00
Dividends 36,000.00
Revenue earned 72,000.00
Supplies expense 3,425.00
Rent expense 6,000.00
Wages expense 22,000.00
93,900.00 93,900.00

ABC Co.
Income Statement
December 31

Revenue 72,000.00
Expenses:
Supplies expense 3,425.00
Rent expense 6,000.00
Wages expense 22,000.00 31,425.00
PROFIT 40,575.00

ABC Co.
Statement of Retained Earnings
December 31

Retained Earnings, Jan 1 11,155.00

Profit 40,575.00
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 51,730.00
Dividends 36,000.00
Retained Earnings, Dec 31 15,730.00

ABC Co.
Statement of Financial Position
December 31

Assets
Cash 6,500.00
Accounts receivable 475.00
Supplies 2,500.00
Equipment 17,000.00
Total Assets 26,475.00

Liabilities
Accounts payable 745.00
Equity
Common Stock 10,000.00
Retained Earnings 15,730.00
Total Liabilities and Equity 26,475.00

Impоrtant Rеfеrеncеs:

Wеygandt, J.J., Kiеsо, DЕ, Kimmеl, P. D., Trеnhоlm, B., Warrеn, V., and Nоvak, L. (2019).
Accоunting Principlеs, Vоlumе 2. Jоhn Wilеy & Sоns.
Sahaf, M. A (2018). Cоrpоratе accоunting:
principlеs and practicеs. Vikas Publishеr.