SOLUTION: Introduction to Financial Accounting | My Assignment Tutor

Arab Open University Faculty of Business Studies BE210: Introduction to Financial Accounting SPRING Semester 2020-2021 TMA – Version B Number of Pages:6 ((including 2 cover sheets About TMA: The TMA covers the financial accounting concepts and practices in the businesses; as you work, you will gain confidence in your ability to use the financial statements of real company. It is marked out of 100 and is worth 20% of the overall assessment component. It is intended to assess students’ understanding of some of the learning points within chapters 1 to 4. This TMA requires you to apply the course concepts. The TMA is intended to: Increase the students’ knowledge about the reality of the accounting as a profession.Assess students’ understanding of key learning points within chapters 1 to 4.Develop the ability to understand and interact with the nature of the financial statements in reality.Develop students’ communication skills, such as memo writing, essay writing, analysis and presentation of material.Develop basic ICT skills such as using the internet. The TMA requires you to: Review various study chapters (from Chapter 1 to 4) of the textbook and apply some of the concepts within it.Conduct a simple information search using the internet.Present your findings and your answers within the specified word count.You should use a Microsoft Office Word and Times New Roman Font of 12 points.You should read and follow the instructions below carefully. Each part of the process will carry marks for the assignment. General instructions for students: Plagiarism: It is imperative that you write your answers using your own words. Plagiarism will be penalized depending on its severity and according to AOU plagiarism policy. Word count: Your answers are expected to be within the specified word count. A 10% deviation from word count limit is acceptable. Not adhering to specified word count could result in the deduction of up to 4 marks of your total TMA mark. Referencing: You are expected to use the Harvard referencing style for in-text referencing and list of reference at the end. Failing to do so could result in the deduction of up to 4 marks of your total TMA mark. E-library: You are expected to use E-library sources to support your answers. A minimum of 3 sources is required. Failing to do so could result in the deduction of up to 4 marks of your total TMA mark. Format and Presentation: In your answer, you should explain each point or inquire separately. Use the following headings (below) to make up the different sections of your answer: PT3 form (Cover)Available on LMSContentsTitle and contents pageTMAReference listRecorded according to the Harvard style – Available on LMS Failing to do so could result in the deduction of up to 4 marks of your total TMA mark. Question 1 (40 marks) A- The information needs of a specific user of financial accounting information depends upon the kinds of decisions that user makes. Identify the major users of accounting information and discuss what questions financial accounting information answers for each group of users. [20 marks]. B- Match the items below by entering the appropriate code letter in the space provided. (10 marks) A. The double-entry system F. Account B. Trial balance G. Business documents. C. Revenue account H. Compound entry D. Debit I. The Journal. E. Chart of accounts K. Posting 1. An entry that involves three or more accounts. 2. A list of accounts and their balances at a given time. 3. A record of increases and decreases in specific assets, liabilities, and equity items. 4. Left side of an account. 5. A list of all the accounts used by an enterprise. 6. Has a credit normal balance 7. requires that each transaction must be recorded in at least two different accounts. 8. provide evidence that an accounting transaction has taken place. 9. is considered as the book of original entry. 10. is the procedure of transferring journal entries to the ledger accounts . C- Choose the correct answer for the following items. (10 marks, 1 mark each) 1) Which of the following is an external user of a business’s financial information? A) Customers B) Cost accountant C) Company manager D) The board of directors 2) Which of the following is a liability account? A) Notes Payable B) Cash C) Building D) Accounts Receivable 3) Arky Corporation records business transactions in dollars and disregards changes in the value of a dollar over time. Which of the following accounting assumptions does this represent? A) economic entity assumption B) going concern assumption C) accounting period assumption D) monetary unit assumption 4) The assets of Mora Company are $120,000 and the total liabilities are $20,000. The equity is ________. A) $160,000 B) $220,000 C) $60,000 D) $100,000 5) Porto Landscaping Services incurred $500 as a labor expense and promised to pay the labor agency within 30 days. Which of the following accounts will increase as a result of this transaction? A) Accounts Receivable B) Cash C) Accounts Payable D) Retained Earnings 6) Which of the following statements is true of a trial balance? A) A trial balance is the first step in the accounting cycle. B) A trial balance is also known as a balance sheet. C) A trial balance is a list of all accounts with their balances. D) A trial balance is also known as the chart of accounts. 7) Which of the following statements is true of a sole proprietorship? A) A sole proprietorship joins two or more individuals as co-owners. B) The sole proprietor is personally liable for the liabilities of the business. C) A sole proprietorship is taxed separately from the owner. D) A sole proprietorship has to pay business income taxes. 8) A debit is not the normal balance for which of the following? A) Asset account B) Dividends account C) Expense account D) Share capital-ordinary account 9) Which of the following statements is false? A) Revenues increase equity. B) Revenues have normal credit balances. C) Revenues are a positive factor in the computation of net income. D) Revenues are increased by debits. 10) Which one of the following account groups normally has a credit balance? A) Liabilities and revenues B) Equity and assets C) Assets and liabilities D) Assets and expenses Question 2( 25 marks) Transactions for Gulf Company are presented below. Identify each transaction by number. The company issued common stock in exchange for $250,000 cash.Hired an employee to be paid $1,000 per week, starting tomorrow.Purchased $6,500 of supplies on account.Purchased equipment for $30,000, paying $20,000 in cash and signed a 30-day, $10,000, note payable.Performed services for a customer on account for $30,000 and the customer promises to pay within this month.Paid $2,000 in cash for the current month’s rent.Paid $2,500 cash on account for supplies purchased in transaction 3.Received a bill for $2,750 for advertising for the current month.Paid $12,000 cash for salaries.The company paid dividends of $9,000.Received $13,000 for services previously performed on account. Instructions: Journalize each transaction (you may omit journal explanations) (22marks = 22 * 1 mark each)Open T account for Cash and post the journal entries to Cash account ONLY, then compute its balance. (3 marks). Question 3 (35 marks) A- On December 31, 2019, after its first month of business, Taylor Industries had the following balances in its accounts, listed alphabetically. Accounts Payable$ 12,000Accounts Receivable15,000Advertising Expense1,000Building150,000Cash?Common Stock100,000Dividends4,000Equipment30,000Land60,000Notes Payable125,000Office Supplies3,500Salaries Expense3,500Service Revenue104,000Utilities Expense2,000 Instructions: Determine the balance in the cash account and prepare the trial balance. (15 marks). B- Using the following information, prepare a classified balance sheet for ABC Company as at 31 December 2019: (20 marks). Inventories $30,000 Plant and equipment $60,000 Short-term borrowings $10,000 Trade payables $40,000 Long-term borrowings $124,000 Property $150,000 Motor Vehicle $30,000 Trade receivables $45,000 Cash $10,000 Equity at Dec 31, 2014 $151,000 Drawings $15,000 Profit $15,000 Determine: (5 marks each). 1- Non-current Assets 2- Current Assets 3- Non-current Liabilities 4- Current Liabilities [End Of Questions]