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

Summary

Accounting exercises and problems for a third week's study. Students get practice with cash and net income, journal entries, trial balances, financial statements and accounting principles.

Cash and net income

Cash and net income can change independently. A change in cash does not always mean a change in net income. Students work out how different transactions affect cash and net income.

Journal entries and trial balance

Students make journal entries for Vogel Consulting. They then prepare an adjusted trial balance. The trial balance shows the balances of all accounts at a point in time.

Financial statements and accounting principles

Students prepare financial statements for Vang Hotel. They also explain the difference between the accrual basis and the cash basis of accounting. The accrual basis recognises revenue when it is earned.

Adjusting journal entries

Students make adjusting journal entries for Vang Hotel. These entries update the accounts to reflect the correct balances at the end of the period.

Key terms

Accrual basis

A method of accounting where revenue is recognised when it is earned.

Cash basis

A method of accounting where revenue is recognised when it is received.

Journal entries

Entries made in the journal to record transactions.

Trial balance

A list of the balances of all accounts at a point in time.

Financial statements

Statements that show the financial position of a company.

Adjusting journal entries

Entries made at the end of an accounting period to update accounts.

Questions this document helps with

• What are the differences between cash and net income?
• How do you record transactions in a journal?
• What does a trial balance show?

Summary written with AI from the document's text.