Chapter 2/3 REVIEW

TERMS (Definition, explanation and examples when they apply)

Business transaction Spreadsheet
Cell Cell pointer
Formula bar Labels
Values Formulas
Functions Assets
Liabilities Capital
Current Assets Long-term Assets
Long-term Liabilities Liquidity Debtor
Creditor IFRS APSE
Cost Principle Business Entity Concept Revaluation Model
Continuing Concern Concept Objectivity Principle Business Transaction
Source Document Current Liabilities
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SAMPLE QUESTIONS:
1. What is the difference between a classified balance sheet and a balance sheet of financial
position? What type of business uses each one? (HINT: Public/private; IFRS/APSE)
2. What is the difference between a balance sheet and an equation analysis sheet? Do they
show the same information? Explain.
3. What is the difference between a formula and a function? Give an example of each.
4. What is the accounting equation?
5. How has technology influenced the way we access and create accounting worksheets over
the past 20 years?
6. There are 2 groups of people that have a claim against the assets. Who are these two
people? Why do they have a claim against the assets? Which of these 2 groups gets the
first claim? Why?
7. P. Lang’s business owned property that had originally cost $40 000. He sold this property
for $75 000. Lang recorded this as follows: he increased Cash by $75 000 and decreased
Property by $75 000. Is Lang’s accounting correct? Why or why not?
8.What are the 5 accounting standards we discussed in class?
Explain and provide an example for each.
9.Analyzing a source document. EXAMPLE:
a. Who issued the bill?
b. Who received the bill?
c. When was the bill issued?
d. When were the goods delivered? How?
e. When is this bill due for payment?
f. Why was the bill issued?
g. Was this a cash sale transaction?
h. Why does this represent good objective evidence?
FORMAT:
- 20 Multiple Choice - 10 True/False
- 3 Short Answer - 1 Transaction Analysis Sheet
- 1 Balance Sheet

Morin Appliance Store, located in Windsor, Ontario, is owned by Michelle Morin. On the
morning of September 30, 2014, she has the following assets and liabilities.
J. Bahous - creditor 1000 Sparks Supply Co. - creditor 3 000 Delivery Truck 10 800

D. Murray - debtor 800 Bank Loan 27 500 Capital ???

Equipment 1 310 Mortgage 50000 Building 90 000

Cash 5000 M. Leone - debtor 700

a) Calculate M. Morin’s capital on September 30, 2014.

b) Set up the assets, liabilities, and capital on the equation analysis sheet provided.
c) Analyze the transactions listed below, and record the necessary changes on the
equation analysis sheet. Calculate new balances after each transaction.
d) After completing the transactions, make sure the equation is still equal. Then prepare a
new balance sheet.
!
Transactions between October 1-31, 2014.
1. Morin has a minor repair made on the delivery truck. She pays the bill for $300 immediately
2. An old cash register, included in the Equipment at a value of $450, is sold for $150 cash.
3. Morin invests an additional $500 in her business.
4. A new cash register is purchased from Sparks Supply Co. for $785. A cash payment of $250
is made. The balance of the purchase price will be paid later.
5. A bank loan payment of $350 is made.
6. Morin Appliance store repairs a washing machine for D. Murray at a price of $500. A bill is
sent to D. Murray.
7. A second delivery truck is purchased at a cost of $17,000. Morin Appliance Store pays
$3000 cash, the rest is borrowed from their bank loan.
8. M. Leone who owes the business $700, pays $600 in partial payment of debt.


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FOR PRACTICE:

Indicate the effect each of the following transactions has on the total assets, the total liabilities,
or the equity, by writing “I” for an increase, “D” for a decrease, or “NC” for no change

Transaction
Total Assets Total Liabilities Owner’s Equity
Example: A cash payment is made to Ace
Supplies, a creditor. ____D____ D NC
a) A new desk for the office is purchased for cash
from Equipment Supply Co.
b) D. Rubin, who owes the company a sum of
money, makes a cash payment on his debt.
c)
The business performs a service for a customer, 

J. Rothfels, who pays in full with cash.
d) The business purchases a new truck from Pine
Motors and pays one-third of the cost in cash 

as a down payment.
e) Stationery and supplies are purchased from
Angeloff’s Stationers, but are not paid for at 

the time of purchase.
f) The owner, J. Lemaire, takes a sum of money 

from the business for his personal use.
g)
Land is sold for cash at a price less than its cost.
h) The business obtains a loan from the bank.