Problems and Exercises: Accounting Assignment – Week Three, Week 3

Summary

Accounting basics are explored through examples. A student will learn how to record transactions and prepare statements for two companies.

Two firms' accounts

The document shows how the Vogel Consult. and Vang Hotel firms record their transactions. Transactions are dated June and May 31 respectively. It lists the amounts on the debit and credit sides of the accounts.

Adjustments for Vogel Consult.

Adjustments to the accounts of Vogel Consult. are completed. This includes adjustments for prepaid insurance and supplies. Adjustments for depreciation and unearned service revenue are also included.

Adjusted trial balance for Vang Hotel

The balance of accounts for Vang Hotel is shown. The adjusted trial balance is prepared. The income statement, retained earnings statement and balance sheet are prepared.

Cash and accrual basis accounting

The difference between cash and accrual basis accounting is explained. An accountant is asked to explain the commercial accounting and generally accepted accounting principles.

Key terms

Accrual accounting

Recording revenues when they are earned, not when they are received.

Adjusted trial balance

A list of accounts with their balances after adjustments.

Balance sheet

A financial statement showing the firm's assets, liabilities and equity.

Cash basis accounting

Counting income only when cash is received, and expenses when they are paid.

Questions this document helps with

• What is the difference between the cash and accrual basis of accounting?
• How do you prepare an adjusted trial balance?
• What does a balance sheet show?

Summary written with AI from the document's text.