ACCt212 midterm exam

1.The Accounting Equation is used to develop the organizations financial reports. Describe what assets value would be if Liabilities are $12,000 and Owners’ Equity is $50,000 by showing the Accounting Equation and provide an example of two asset accounts that could contain the value.

2.The financial statements present a company to the public in financial terms. Which financial statement should be prepared first and why and explain what information this financial statement provides.

3.The accounting profession follows a set of guidelines for measurement and disclosure of financial information called the Generally Accepted Accounting Principles (GAAP). Explain what the Going-concern Assumption is and provide an example of its application.

4.ransaction analysis results in the development of a journal entry. A building is purchased for $535,000. Name the accounts impacted and how using the format account name/debit or credit/dollar amount and explain how the Accounting Equation is impacted

5.Adjusting Entries are required at the end of the period to ensure that accrual accounting principles are applied. The rent is prepaid for three months at $1,200 per month. Develop the adjusting entry at the end of the first month that rent should be applied. Name the accounts impacted and how using the format account name/debit or credit/dollar amount and explain how the Accounting Equation is impacted

6.E-commerce creates its own risks and therefore special internal controls. Identify and explain one pitfall and one security measure for an online business and provide examples of how your selected security measure will strengthen internal control.

7.The bank account as a control device helps to protect cash. One of the requirements is to conduct periodic bank statement reconciliations. Using the following data, complete the bank statement reconciliation.

Use the information below to prepare the bank reconciliation for Collier Cleaners for the month of September.

· The bank statement indicated bank service charges of $63.
· Outstanding checks as of September 30 amounted to $1,405.
· Deposits in transit as of September 30 amounted to $2,769.
· The ending balance per the September bank statement is $40,753.
· Collier Cleaners bookkeeper mistakenly recorded a $1,610 cash disbursement as $1,160 for Office Supplies on check #2402.
· The bank mistakenly recorded a deposit of $2,800 as $280 on February 17.
· The bank made an EFT payment on behalf of the company for Insurance for $3,200.
· Bank collected rent of $3,000 and a note, for $16,450, including interest of $450.
· The ending cash balance per the books for September before any adjustments was 28,900