Chapter 1 - Introduction to Accounting and Business
Learning Objectives
Obj. 1: Describe the nature of a business and the role of accounting and ethics in business.
Obj. 2: Describe generally accepted accounting principles, including the underlying assumptions and principles.
Obj. 3: State the accounting equation and define each element of the equation.
Obj. 4: Describe and illustrate how business transactions can be recorded in terms of the resulting change in the elements of the accounting equation.
Obj. 5: Describe the financial statements of a corporation and explain how they interrelate.
Illustration - American Express has current assets of $360 million; property, plant, and equipment of $600 million; and other assets totaling $220 million. Current liabilities are $210 million and long-term liabilities total $560 million.
Requirements
1. Use these data to write Blue Diamond Corporation's accounting equation.
2. How much in resources does Blue Diamond Corporation have to work with?
3. How much does Blue Diamond Corporation owe creditors?
4. How much of the company's assets do the Blue Diamond Corporation stockholders actually own?
Chapter 2 - Analyzing Transactions
Learning Objectives
Obj. 1: Describe the characteristics of an account and a chart of accounts.
Obj. 2: Describe and illustrate journalizing transactions using the double-entry accounting system.
Obj. 3: Describe and illustrate the journalizing and posting of transactions to accounts.
Obj. 4: Prepare an unadjusted trial balance and explain how it can be used to discover errors.
ADM: Describe and illustrate the use of horizontal analysis in evaluating a company's performance and financial condition.
Journal Entries - During the first month of operations, Simmons Urgent Care Inc. completed the following transactions:
Jan. 1 David Simmons deposited $30,000 in a bank account in the name of Simmons Urgent Care Inc. in exchange for common stock.
Jan. 2 Purchased medical supplies on account, $6,000.
Jan. 6 Paid cash to creditors on account, $3,200.
Jan. 7 Purchased office equipment on account, $62,500.
Prepare the journal entries to record these transactions, and illustrate their impact on the accounting equation.
Textbook - Corporate Financial Accounting 14e by Warren Reeve Duchac.