FINANCIAL ACCOUNTING 9TH
16th Edition
ISBN: 9781308821672
Author: Libby
Publisher: MCG/CREATE
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Chapter 3, Problem 3.8ME
To determine
Ascertain the effects of operating activities that involve expense on the financial statements.
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Indicate if the following transaction from Torte Baking Company increases or decreases assets, liabilities, equity, revenue, expense, and net income. The pattern of the + and - must adhere to the balance sheet equation. Show the impact of revenue and expense on both net income and equity. If there is a + and - within one category (e.g., assets for transaction 2), then list the accounts that go up and down.
Transaction
(25)
Record Salary Expense that will be paid later
Assets
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Liabilities
["", "", ""]
Equity
["", "", ""]
Revenue
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Expense
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Net Income
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Use the Income Statement worksheet below to answer: Which of the following items on the Income Statement connects to the same year’s Balance Sheet?
Question 3 options:
Liability Insurance
Net Income
EBT
Gross Profit
EBTDA
Directions: Fill in the Cash Basis Income Statement and the Accrual Basis Income Statement given the transactions below. Use a separate line item on the statements for each transaction. If a transaction does not lead to a revenue or an expense do not put anything on the income statement. The accounting period ends on December 31. Show revenues as positives and expenses as negatives in the spreadsheet. The spreadsheet is set up to calculate net income for each year as revenues minus expenses.
Transactions:
1
In January of Year 1, Hicks Company signed a contract for $720,000 to provide consulting services evenly over a 3 year period. They received one-half of the payment up front and will receive the remainder at the completion of the contract.
2
Hicks spent $5,000 in Year 1, $6,000 in Year 2, and $7,000 in Year 3 on research that they hope will lead to better consulting processes.
3
Hicks signed a three-year lease on office space for $6,000 per year. They…
Chapter 3 Solutions
FINANCIAL ACCOUNTING 9TH
Ch. 3 - Prob. 1QCh. 3 - Prob. 2QCh. 3 - Write the income statement equation and define...Ch. 3 - Explain the difference between a. Revenues and...Ch. 3 - Define accrual accounting and contrast it with...Ch. 3 - Prob. 6QCh. 3 - Explain the expense recognition principle.Ch. 3 - Explain why stockholders equity is increased by...Ch. 3 - Explain why revenues are recorded as credits and...Ch. 3 - Complete the following matrix by entering either...
Ch. 3 - Complete the following matrix by entering either...Ch. 3 - Prob. 12QCh. 3 - State the equation for the net profit margin ratio...Ch. 3 - Which of the following is not a specific account...Ch. 3 - Which of the following is not one of the criteria...Ch. 3 - The expense recognition principle controls a....Ch. 3 - Prob. 4MCQCh. 3 - Prob. 5MCQCh. 3 - Prob. 6MCQCh. 3 - Prob. 7MCQCh. 3 - Prob. 8MCQCh. 3 - Prob. 9MCQCh. 3 - Prob. 10MCQCh. 3 - Prob. 3.1MECh. 3 - Reporting Cash Basis versus Accrual Basis Income...Ch. 3 - Identifying Revenues The following transactions...Ch. 3 - Identifying Expenses The following transactions...Ch. 3 - Prob. 3.5MECh. 3 - Prob. 3.6MECh. 3 - Determining the Financial Statement Effects of...Ch. 3 - Prob. 3.8MECh. 3 - Prob. 3.9MECh. 3 - Identifying the Operating Activities in a...Ch. 3 - Prob. 3.11MECh. 3 - Prob. 3.1ECh. 3 - Reporting Cash Basis versus Accrual Basis Income...Ch. 3 - Identifying Revenues Revenues are normally...Ch. 3 - Identifying Expenses Revenues are normally...Ch. 3 - Prob. 3.5ECh. 3 - Determining Financial Statement Effects of Various...Ch. 3 - Recording Journal Entries Sysco, formed in 1969,...Ch. 3 - Prob. 3.8ECh. 3 - Prob. 3.9ECh. 3 - Analyzing the Effects of Transactions in...Ch. 3 - Preparing an Income Statement Refer to E3-10....Ch. 3 - Prob. 3.12ECh. 3 - Analyzing the Effects of Transactions in...Ch. 3 - Prob. 3.14ECh. 3 - Prob. 3.15ECh. 3 - Prob. 3.16ECh. 3 - Prob. 3.17ECh. 3 - Prob. 3.18ECh. 3 - Prob. 3.19ECh. 3 - Prob. 3.20ECh. 3 - Prob. 3.1PCh. 3 - Recording Journal Entries (AP3-2) Ryan Terlecki...Ch. 3 - Prob. 3.3PCh. 3 - Prob. 3.4PCh. 3 - Prob. 3.5PCh. 3 - Prob. 3.6PCh. 3 - Prob. 3.7PCh. 3 - Recording Nonquantitative Journal Entries (P3-1)...Ch. 3 - Prob. 3.2APCh. 3 - Prob. 3.3APCh. 3 - Prob. 3.4APCh. 3 - Prob. 3.5APCh. 3 - Prob. 3.6APCh. 3 - Accounting for Operating Activities in a New...Ch. 3 - Finding Financial Information Refer to the...Ch. 3 - Finding Financial Information Refer to the...Ch. 3 - Comparing Companies within an Industry Refer to...Ch. 3 - Analyzing a Company over Time Refer to the annual...Ch. 3 - Prob. 3.6CPCh. 3 - Evaluating an Ethical Dilemma Mike Lynch is the...
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- Indicate if the following transaction from Torte Baking Company increases or decreases assets, liabilities, equity, revenue, expense, and net income. The pattern of the + and - must adhere to the balance sheet equation. Show the impact of revenue and expense on both net income and equity. If there is a + and - within one category (e.g., assets for transaction 2), then list the accounts that go up and down. Transaction (26) Recognize tax expense that will be paid later. Assets ["", "", ""] Liabilities ["", "", ""] Equity ["", "", ""] Revenue ["", "", ""] Expense ["", "", ""] Net Income ["", "", ""]arrow_forwardWhich financial statement is a summary of the revenue and expenses for a specific period of time, such as a month or a year, that indicates whether a company realized a net profit or incurred a net loss? Group of answer choices income statement pie chart statement of owner’s equity balance sheetarrow_forwardIndicate all of the following statements that correctlydescribe net income. Net income:a. Is equal to revenue minus expenses.b. Is equal to revenue minus the sum of expenses anddividends.c. Increases owners’ equity.d. Is reported by a company for a specifi c period of time.arrow_forward
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