- You will describe elements of the accounting environment and prepare an income statement, balance sheet, and statement of retained earnings.
Introduction
Imagine you are trying to grow your business by attracting investors, clients, or securing a loan. You’ll need to tell a compelling story that demonstrates your understanding of business finance and the language it speaks—the language of accountants. Accounting is often called the language of business, and rightfully so, because effective business organizations set up an accounting information system to communicate data to help internal and external stakeholders make better decisions. Reporting the results of an organization’s business transactions to these stakeholders requires the preparation of financial reports such as a balance sheet (statement of financial position), retained earnings, and the income statements. Accurate preparations of these statements require essential accounting knowledge and skills.
Overview
In this assessment, you are required to:- Answer questions designed to test your knowledge of the basic accounting environment.
- Prepare income, balance, and retained earnings statements.
- Preparation
- Use the Assessment 1 Template [XLSX] to complete this assessment.
- Review all suggested readings.
- Note: Accuracy in accounting is paramount. Take your time and double-check your work for errors or omissions.
Scenario
For parts 2–4: Imagine that you have been given June 2010 financial transaction data provided by Moonlight Drive-In Theater and have been asked to prepare specified financial statements. This information is found in the Assessment 1 Template [XLSX].
Instructions
Step 1: Describe the accounting environment.
Step 2: Prepare an income statement.
Step 3: Prepare a statement of retained earnings.
Step 4: Prepare a balance sheet.
Complete each of the following assessment parts in sequence using the Week 1 Assessment 1 Template [XLSX]. All parts of the template should be submitted together. Each template tab corresponds to one of the following assessment parts:
Part 1: Accounting Environment
Respond to the short-answer accounting environment questions found in the template on the “Accounting Environment” tab using proper grammar and language.
Part 2: Income Statement - Source: Edwards, J. D., Hermanson, R. H., & Maher, M. W. (2011). Accounting principles: A business perspective, financial accounting (Chapters 1–8) [PDF]. Textbook Equity. Problem C, page 67.
- Prepare an income statement for June 2010. Make sure to identify account names and amounts.
Part 3: Statement of Retained Earnings.
Prepare a statement of retained earnings for June 2010, using the information in Part 2.
Part 4: Balance Sheet.
Prepare a balance sheet as of June 30, 2010, using the information in Part 2. Make sure to identify account names and amounts.
Save and submit your completed template in the courseroom.
Competencies Measured
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria: - Competency 1: Define accounting terminology and its application to accounting principles.
- Describe the accounting environment.
- Competency 3: Prepare financial statements from accounting system data.
- Prepare an income statement.
- Prepare a statement of retained earnings.
- Prepare a balance sheet.
- Competency 4: Convey purpose, in an appropriate tone and style, incorporating supporting evidence and adhering to organizational, professional, and scholarly writing standards.
- Convey clear meaning through appropriate word choice and usage.
- References
Edwards, J. D., Hermanson, R. H., & Maher, M. W. (2011). Accounting principles: A business perspective, financial accounting (Chapters 1–8). Textbook Equity.
Part 1 – Accounting Environment
| BUS3061 Week 1 Assignment Template | |
| PART 1: Accounting Environment | |
| Respond to the following 6 questions using grammatically correct language. | |
| 1. Describe the similarities and differences between the two categories (Financial & Managerial Accounting) and provide examples of the users of each type of data that are the result of the work in each category. | [Answer here] |
| 2. Describe the four major types of internal management decisions that utilize management accounting information. | [Answer here] |
| 3. Identify each of the six organizations that are influential in the establishment of GAAP and discuss their role. | [Answer here] |
| 4. Identify and describe the three basic forms of business organization. Include the advantages and disadvantages of all three. | [Answer here] |
| 5. Identify the primary objectives of every business. What are the four basic financial statements that measure the primary objectives of every business? Describe what information each statement presents and which of the primary objective(s) can be met through the information presented on the statement. | [Answer here] |
| 6. Describe the difference between an asset, liability, and equity on a company’s balance sheet. | [Answer here] |
Part 2 – Income Statement
| PART 2: Income Statement | ||||
| Complete the income statement for the following transactions for June 2010 disclosed Fill in the yellow cells as appropriate. | ||||
| Ticket revenue | $180,000 | |||
| Equipment rent expense | $50,000 | |||
| Film rent expense | $53,400 | |||
| Concession revenue | $29,600 | |||
| Advertising expense | $18,600 | |||
| Salaries expense | $60,000 | |||
| Utilities expense | $14,100 | |||
| Cash dividends declared and paid | $12,000 | |||
| Balance sheet amounts at June 30 include the following: | ||||
| Cash | $140,000 | |||
| Land | $148,000 | |||
| Accounts payable | $87,600 | |||
| Capital stock | $114,000 | |||
| Retained earnings as of 2010 June 1 | $84,900 | |||
| Income Statement | ||||
| Prepare the Income Statement | ||||
| Revenues: | ||||
| Total Revenue | ||||
| Expenses: | ||||
| Total Expenses | ||||
| Net Income | ||||
| Retained Earnings | ||||
Part 3 – Retained Earnings
| PART 3: Statement of Retained Earnings | |
| Complete the statement of retained earnings using information from Part 2. Fill in the yellow cells as appropriate. | |
| Retained Earnings – June 1 | |
| Add: Net income | |
| Total | |
| Less: Dividends | |
| Reatined Earnings – End | |
Part 4 – Balance Sheet
| PART 4: Balance Sheet | ||
| Complete the balance sheet using information from Part 2. Fill in the yellow cells as appropriate. | ||
| Assets | ||
| Total Assets | ||
| Liabilities and Equities | ||
| Stockholder’s Equity | ||
| Total Liab. & Eq. |
,
Part 1 – Accounting Environment
| BUS3061 Week 1 Assignment Template | |
| PART 1: Accounting Environment | |
| Respond to the following 6 questions using grammatically correct language. | |
| 1. Describe the similarities and differences between the two categories (Financial & Managerial Accounting) and provide examples of the users of each type of data that are the result of the work in each category. | [Answer here] |
| 2. Describe the four major types of internal management decisions that utilize management accounting information. | [Answer here] |
| 3. Identify each of the six organizations that are influential in the establishment of GAAP and discuss their role. | [Answer here] |
| 4. Identify and describe the three basic forms of business organization. Include the advantages and disadvantages of all three. | [Answer here] |
| 5. Identify the primary objectives of every business. What are the four basic financial statements that measure the primary objectives of every business? Describe what information each statement presents and which of the primary objective(s) can be met through the information presented on the statement. | [Answer here] |
| 6. Describe the difference between an asset, liability, and equity on a company’s balance sheet. | [Answer here] |
Part 2 – Income Statement
| PART 2: Income Statement | ||||
| Complete the income statement for the following transactions for June 2010 disclosed Fill in the yellow cells as appropriate. | ||||
| Ticket revenue | $180,000 | |||
| Equipment rent expense | $50,000 | |||
| Film rent expense | $53,400 | |||
| Concession revenue | $29,600 | |||
| Advertising expense | $18,600 | |||
| Salaries expense | $60,000 | |||
| Utilities expense | $14,100 | |||
| Cash dividends declared and paid | $12,000 | |||
| Balance sheet amounts at June 30 include the following: | ||||
| Cash | $140,000 | |||
| Land | $148,000 | |||
| Accounts payable | $87,600 | |||
| Capital stock | $114,000 | |||
| Retained earnings as of 2010 June 1 | $84,900 | |||
| Income Statement | ||||
| Prepare the Income Statement | ||||
| Revenues: | ||||
| Total Revenue | ||||
| Expenses: | ||||
| Total Expenses | ||||
| Net Income | ||||
| Retained Earnings | ||||
Part 3 – Retained Earnings
| PART 3: Statement of Retained Earnings | |
| Complete the statement of retained earnings using information from Part 2. Fill in the yellow cells as appropriate. | |
| Retained Earnings – June 1 | |
| Add: Net income | |
| Total | |
| Less: Dividends | |
| Reatined Earnings – End | |
Part 4 – Balance Sheet
| PART 4: Balance Sheet | ||
| Complete the balance sheet using information from Part 2. Fill in the yellow cells as appropriate. | ||
| Assets | ||
| Total Assets | ||
| Liabilities and Equities | ||
| Stockholder’s Equity | ||
| Total Liab. & Eq. |
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