FINANCIAL ACCOUNTING

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USE THE GENERAL JOURNALS TO RECORD YOUR ANSWERS
1. It is the end of Kellco’s fiscal year. You have been given the following
adjusted ledger balances. The ledger account balances are the normal
balances for each account.
Cash $125,000
Accounts Rec. 300,000
Inventory 75,000
Pre-paid expense 38,000
Land 100,000
Equipment 350,000
Accum. Depreciation 80,000
S.T. Notes Payable 150,000
Accounts Payable 125,000
Kelly Capital 175,000
Kelly Drawing 80,000
Income Summary 0
Sales 958,000
Wage Expense 250,000
Fuel Expense 35,000
Insurance Expense 35,000
Utilities Expense 85,000
Depreciation Expense 15,000
Required:
Make all the required closing entries. You do not have to prepare a Trial
Balance to complete the problem just the closing journal entries. Use the
journal paper on the next page to make your journal entries.
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DATE ACCOUNT DR CR
2. Dominic Bueno started a delivery business as a sole proprietorship on
7/1/XX. During the month of July the company had the following
transactions:
7/1 The owner invested $100,000 in cash into the business checking
account.
7/1 Rented a garage with office space for $5,000 per month and paid
the first month’s rent by check.
7/2 A new 2 ton delivery truck was purchased by the company. The
total purchase price including taxes, license and fees was
$115,000. The company paid $15,000 by check as a down
payment and signed a long-term note for five years at an interest
rate of 9% per year for the balance that was owed.
7/6 The company purchased a desktop computer and a printer for a
total price of $1,150 and paid by check for the computer equipment.
7/8 Picked up and delivered machinery for a client. Billed $350 for the
delivery service with terms “due on receipt”.
7/10 Received a bill for legal services in the amount of $1,200.
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7/12 Entered into a $125,000 one year contract with a client to provide
delivery services.
7/14 Received the amount owed from the 7/8 transaction.
7/15 Picked up and delivered furniture for a client and billed the client
$565 with terms of “due on receipt”.
7/15 Wrote a check to Mr. Bueno for personal use in the amount of
$2,000.
7/18 Purchased diesel fuel from a bulk fuel distributor on credit. The total
amount owed for the fuel was $579 which the company will receive
a bill for at the end of the month.
7/21 Delivered machinery under the terms of the contract signed on
7/12. The contract terms required that any amounts owed for
delivery services will be billed for at the end of each month with
terms of net 30 days.
7/31 Received the bill for the purchase of diesel fuel on 7/18 with terms
of net 30 days.
7/31 Received a utility Bill in the amount of $475 and paid the bill
immediately by check.
7/31 Billed the client for the delivery service provided on 7/21 in the
amount of $2,100.
Required:
Make the necessary journal entries from the information given. Some
dates do not require a journal entry. On dates that do not require an entry
say “no entry required”. Omit the journal descriptions. Use the journal
paper on the next page to make your journal entries.
Date. Account Dr Cr
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3. You have been given an unadjusted Trial Balance at the end of
Alico Inc. FY (12/31/XX): In reviewing the unadjusted Trial Balance,
the following information has come to your attention:
a. Alico Inc. entered into a six-month contract on 11/1/XX to provide
maintenance service for six apartment houses owned by a Real
Estate Investment Trust. The total value the contract was $185,000
and required a $20,000 prepayment. On 11/1/XX the bookkeeper
debited cash and credited Maintenance Revenue for the $20,000
prepayment. On 12/31/XX 20% of the contracted services had been
completed.
b. On 8/1/XX a one year fire insurance policy was purchased for
$36,000. The bookkeeper debited Prepaid Insurance Expense and
credited Cash to record the transaction. No other journal entries
had been made for this transaction.
c. Wages in the amount of $95,000 had been earned by Alico Inc.’
employees but will not be paid until next year. No entry had been
made to record this fact.
d. On 11/1/XX Alico Inc. lent $50,000 to one of its clients and the
client signed a 90 day note receivable on this date with interest and
principal due and payable on January 31 of the next year. The
interest rate was at 14% per year. At the end of the current year
Alico Inc.had earned $1,167 in interest on the note. This amount
had not yet been recorded.
.
e. Depreciation in the amount of $15,000 had not yet been recorded.
Required: Make the required adjusting entries on 12/31/XX from the
information given above. As a journal description, indicate what
accounting principle that would have been violated if the adjusting entry
had not been made. Use the journal paper on the next page to make your
journal entries.

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Date Account Dr Cr
ANSWER THE FOLLOWING QUESTIONS ON THE TEST PAPER:
4. Give the assumption or principle that would have been violated if the
following entries or information had not been given:
a. An Adjustment is made for payroll expense at the EFY eventhough it had not been paid:
b. A company was required to revalue all of its assets liabilities and
owners equities at the end of the accounting year because it was
going to file for bankruptcy and go out of business within a year.
c. Changing the method of recognizing depreciation is not allowed
from one accounting period to another.
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d. An international corporation must record all of its foreign
transactions in dollars for United States financial reporting
purposes.
e. A company records a fixed asset for not only the invoice price but
all of the costs that it takes to put that asset into use.
HIGHLIGHT THE CORRECT ANSWER IN YELLOW OR CIRCLE IT.
(Chose the most correct answer)
5. GAAP requires the use of the accrual accounting system when:
a. The IRS requires it if a business is dealing in inventory.
b. When a company is publicly owned.
c. When a company borrows money for a financial institution.
d. none of the abouve
6. A Deferred Revenue is:
a. A revenue that has been received and earned.
b. An revenue that will be collected in the future.
c. An revenue that has been received, but is a liability until earned.
d. A future revenue that is listed as an asset.
7. What kinds of accounts are closed at the end of a fiscal year?
a. Assets, Liabilities, Owner Equity, Revenue and Expenses.
b. Revenue and Expense accounts and temporary Balance Sheet
accounts
c. All accounts.
d. Temporay and perminate Balance Sheet accounts.
8. There are four basic financial statements required by GAAP. They are:
a. Balance Sheet, Income Statement, Cash Flow Statement and
a Trial Balance.
b. Balance Sheet, Income Statement, Cash Flow Statement and
a Work Sheet.
c. Balance Sheet, Income Statement, Cash Flow Statement and
a Statement of Change to Retained Earnings.
d. Balance Sheet, Income Statement, Cash Flow Statement and
a Post Close Trial Balance.
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9. The Historical Cost Principle states that:
a. All financial information must be stated at what the company can
realize in value if it sold all of the asset the company owned.
b. A revenue is recorded for the amount you paid for it.
c. Assets must be recorded at the cost they are acquired for and must
be kept at that cost in the accounting system until they are
disposed off.
d. All of the above.
10 The normal balance of an account for an Owners Equity account would
be:
a. A debit.
b. The same as an Asset Account.
c. The amount that was invested by the companies owner.
d. A credit.
11. The Industrial Practices Principle states that:
a. A company must follow the same rules as other companies.
b. If all the companies in an industry violate the same principle then a
company in that industry can violate the same principle.
c. Require a company to ahear to the priciples even if other
companies within the industry are not.
d. Allows a company to change the way they are recording a
transaction.
12. What is a Current Asset?
a. An asset that is about to be sold.
b. A fixed asset that has a long life.
c. Any asset that has an economic life of over a year.
d. An asset the will be consumed within a 12 month period.
13. In Finacial Accounting, cost is divided into 3 major catigories:
a. Depreciable assets, Liabilities and Owners Equity.
b. Period Costs, Long Term Cost and Short Term Cost.
c. Cost of Goods Sold, Cost of Items Purchased and Cost of
Inventory.
d. Inventoriable Cost, Capital Cost and Period Cost.
14 The Cash basis of accounting can be used:
a. in an accrual accounting system.
b. by a company that sells merchandise.
c. to conform to GAAP
d. none of the above.
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15. Define the Cost principle:
16. What is an Accured Revenue?
17. Define the Expense Recognition (Matching) principle:
18. What two accounting principles are most responsible for making adjusting
entries
19. List the external users of Financial Statements:
20. Why is accounting important to the business world?
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FINANCIAL ACCOUNTING
CHART OF ACCOUNTS
Prof. R.S. Claire
NORMAL
BALANCE SHEET ACCOUNTS BALANCE
ASSETS
Current Assets
Cash/Checking Debit
S.T. Investments Debit
Avaliable for sale Investments Debit
Fair Market Value Adjustment Debit/Credit
S.T. Notes Rec. Debit
Interest Rec. Debit
Accounts Receivable Debit
Less: Allowance for Bad Debts Credit
Inventory Debit
Pre-paid expense (Insr., Rent,) Debit
Assets Under Consructions Debit
Deposits (Security, Equipment, Rent etc.) Debit
Operating Assets (Plant & Equip.-Fixed Assets)
Land Debit
Buildings Debit
Less: Accumulated Depreciation-Build. Credit
Plant & Equipment Debit
Less: Accumulated Depreciation-Plant & Equipment Credit
Funiture & Fixtures Debit
Less: Accumulated Depreciation-F&F Credit
Office Equipment Debit
Less: Accumulated Depreciation-Office Equipment Credit
Communicaition Systems (Phone, Fax, etc. Debit
Less: Accumulated Depreciation-Communication Systems Credit
Computer Systems Debit
Less: Accumulated Depreciation-Computer Systems Credit
Transportation Equip. Debit
Less: Accumulated Depreciation-Transp. Equip. Credit
Leasehold improvements Debit
Other Assets (Intangiable Assets)
Goodwill Debit
Patends Debit
Copyrights Debit
Trademarks Debit
Water Rights Debit
Natural Resourses
Mineral Rights Debit
Timber Rights Debit
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Oil Rights Debit
LIABILITIES
Current Liabilities
S.T. Notes Payable Credit
Accounts Payable Credit
Credit Card Payable Credit
Accured Payables Credit
Payroll Payable Credit
Interest Payable Credit
Un-earned Revenue Credit
Cash Dividend Payable Credit
Common Stock Dividends to be Distributed Credit
Current Por. Of L.T. Debt Credit
Long Term Liabilities
L.T. Notes Payable Credit
Bond Payable Credit
Less:Bond Discount Debit
Add: Bond Premium Credit
OWNERS EQUITY
Sole Proprietorship
Capital Credit
Less: Drawing Debit
Partnership/LLP/LLC
Capital (for each partner) Credit
Less: Drawing (for each partner) Debit
Corporation (“C” Corp. & “S” Corp.)
Stockholders Equity
Preferred Stock Credit
Paid in excess of Par-Pref. Stock Credit
Common Stock Credit
Paid in exess of Par-Common Stock Credit
Retained Earnings Credit
Cash Dividend Debit
Stock Dividend Debit
Treasury Stock Debit
Paid in capital from T. S. Transaction Credit
Accumulated Other Comprehensive Income
Unrealized Holding gain/loss on S.T. Investments Debit/Credit
Foreign currency translation gains or losses Debit/Credit
Pension plan gains or losses Debit/Credit
Non-controlling Interest Debit
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INCOME STATEMENT STATEMENT, (P&L STATEMENT)
NORMAL NORMAL
SERVICE INDUSTRY BALANCE MERCHANDISING INDUSTRY BALANCE
REVENUE REVENUE
Maint. Service Rev. Credit Sales Credit
Contracting Serv. Rev. Credit Less: Sales Returns & Allow. Debit
Software Devel. Rev Credit Cash (Sales) Discounts Debit
Consulting Rev. Credit Quantity Discounts Debit
Interest Revenue Credit
Repair Reveneue Credit
EXPENSES COST OF GOODS SOLD
Advertising Debit PERIODIC INVENTORY SYSTEM
Auto expense Debit Purchases Debit
Bad Debt Expense Debit
Less: Purchase Returns ans
Allow. Credit
Bank charges Debit Purchase Discounts Credit
Counsulting Debit PERPETUAL INVENTORY SYSTEM Debit
Depreciation exp. Debit Cost of Goods Sold
Dues & Subscriptions Debit EXPENSES
Frieght in Debit Advertising Debit
Fuel exp. Debit Bad Debt Expense Debit
Insr. exp. Debit Bank charges Debit
Interest exp. Debit Counsulting Debit
Bond Interest exp. Debit Depreciation exp. Debit
IT-Computer Exp. Debit Dues & Subscriptions Debit
Licenses and Fees Debit Frieght in Debit
Maint. exp Debit Fuel exp. Debit
Marketing exp. Debit Insr. exp. Debit
Meals exp. Debit Interest exp. Debit
Misc. exp. Debit Bond Interest exp. Debit
Office supplies exp. Debit IT-Computer exp. Debit
Phone exp. Debit Licenses and Fees
Payroll exp. Debit Maint. exp Debit
Gross Payroll Exp. Debit Marketing exp. Debit
Payroll Tax exp. Debit Meals exp. Debit
Professional Services Debit Misc. exp. Debit
Rent exp. Debit Office supplies exp. Debit
Repair parts Debit Payroll exp.
Shipping exp Debit Gross Payroll exp.
Software exp Debit Payroll Tax exp. Debit
Tax exp. Debit Phone exp. Debit
Travel exp Debit Professional Services Debit
Uniforms Debit Rent exp. Debit
Utilities Debit Repair parts Debit
Shipping exp Debit
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Tax exp. Debit
Travel exp Debit
Uniforms Debit
Utilities Debit
OTHER REVENUE/GAINS
Realized Gains from sale of
Investments Credit
Unrealized Holding Gains on S.T.
Investments Credit
Interest Income. Credit
Invetstment Income Credit
Gain on the Disposal of Assets Credit
OTHER EXPENSES/LOSSES
Unrealized Holding Loss from sale
of investments Debit
Loss on Disposal of Assets Debit
FINANCIAL ACCOUNTING
CHART OF ACCOUNTS

Sample Solution

For what reason are there numerous hypotheses of inspiration in authoritative conduct?

Right off the bat I accept that we have to comprehend what inspiration is before we can comprehend why there are loads of persuasive hypotheses.

‘Inspiration’ originates from the Latin word movere, signifying ‘to move’ (kreitner R., kinicki A., Buelens M., 2002, p: 176) which means as actuality, need, feeling and natural state which urges an individual to make a move.

An individual’s exhibition at work is influenced by a few individual components (Personality, frames of mind and convictions, inspiration, discernment) yet specifically, by Motivation. The word reference characterizes inspiration as “the motivation behind why someone accomplishes something or carries on with a specific goal in mind” (Oxford Advanced Learner’s Dictionary of Current English, 2000, p1128). Numerous scholars throughout the years beginning from the modern insurgency have dissected what makes laborers work more enthusiastically. This exposition will show why there are numerous hypotheses of inspiration I will take a gander at two speculations Maslow’s progressive system and Hertzberg’s two factor speculations to attempt to decide why there is a need such a large number of speculations of inspiration.

Numerous associations face challenges when attempting to inspire their staff. In the event that the workers are spurred the organization is probably going to be increasingly effective. To have the option to get inspiration and the manner in which it works, we need to comprehend human instinct itself, supervisors additionally need to comprehend the work exertion inspiration cycle as to not free there staff to all the more energizing fulfilling and fulfilling jobs else were.( French, R., et al, 2008, Organizational Behavior p157) There must be viable administration and authority to propel staff. Numerous organizations accept that compensation is the prime inspiration; anyway individuals might need to surpass, get affirmation for there endeavors, they might need to feel a piece of a gathering and furthermore need to feel an uplifted feeling of worth at the working environment. This is the place strengthening has a significant influence in an organization’s movement. ( French, R., et al, 2008, Organizational Behavior. p 156)

“Strengthening is the procedure by which directors representative capacity to workers to persuade more prominent duty in adjusting the accomplishment of both individual and authoritative objectives”.

(Ref.- Chapter 4: Motivation and Empowerment page 184French, R. ,et al, 2008, Organizational Behavior. Chichester: Wiley)

By engaging representatives this will make the staff progressively fulfilled, profitable and persuaded all through their working hours. During the time numerous scholars have attempted to clarify what inspiration is by planning speculations depicting how chiefs ought to invigorate their staff. (French, R. et al.,2008, Organizational Behavior pp157-159)

There are two primary kinds of inspiration hypotheses substance and procedure speculations, the substance hypotheses take a gander at the requirements that people have, it incorporates 4 part speculations: Maslow’s chain of importance of necessities model, Alderfer’s adjusted need pecking order model, McClelland’s accomplishment inspiration hypothesis and Herzberg’s two-factor hypotheses. The Process Theories are a comprehension of the manner of thinking that impact conduct. The real procedure hypotheses of inspiration incorporate Vroom’s anticipation hypothesis, objective setting hypothesis, and fortification hypothesis and Adams’ value hypothesis. (French, R et al, 2008 Organizational Behavior p160)

Abraham Maslow has a structure which he has called the pecking order of necessities. There are five essential needs, which individuals should maintain. These are physiological, security, social, regard and self-realization. (French, R et al, 2008 Organizational Behavior p161)

Physiological needs are sustenance, drink, sanctuary and sex, Safety needs are the security and assurance from physical and enthusiastic damage. Social needs allude to a requirement for affection. That implies an individual will make progress toward great associations with individuals and a spot inside there gathering. .(Wilson, F M(2004) Organizational Behavior and work)

The requirements that Maslow has at the base of the pyramid depend on essential needs worried about survival or lower request needs, and these must be fulfilled before an individual can go to the following level on the progressive system of necessities until self completion which Maslow contended that in spite of the fact that everyone can, relatively few achieve this level. (Wilson, F M (2004) Organizational Behavior and work)

While Maslow’s hypothesis appears to bode well at first, there is little to demonstrate that an exacting chain of importance works in consistently working life. Truth be told research repudiates the request of necessities on the grounds that in certain societies they will in general put social needs before some other need. Maslow’s chain of importance additionally experiences difficulty clarifying cases, for example, the “destitute craftsman” where an individual will disregard there physical needs to pick up an otherworldly need. Maslow likewise proposes that one need is fulfilled at once where there is no proof this is valid.

In all inspiration hypotheses there are dependably points of interest and impediments, Maslow has been reproachful of his hypothesis himself, in an announcement he stated: “My inspiration hypothesis was distributed 20 years back and in all that time no one rehashed it, or tried, or truly dissected it or reprimanded it. They simply utilized it, gulped down it with just the minor adjustment”

Ref-Wilson, F.M (2004). Hierarchical conduct and work. Oxford University press, page146 (Lowry 1982:6

Clayton Alderfer proposed the ERG hypothesis, which is fundamentally the same as Maslow’s hypothesis, it additionally depicts needs as a chain of command. The letters ERG represent three degrees of necessities: Existence, Relatedness, and Growth. This hypothesis depends on crafted by Maslow, so it has a great deal which is comparative with it yet it likewise varies in some significant viewpoints.

He contends that Maslow’s hypothesis isn’t adaptable and because of this individuals may wind up baffled as they are not ready to move to the following stage. Alderfer has limited Maslow’s 5 level hypotheses into 3 levels; this hypothesis is increasingly adaptable as individuals can go here and there the progressive system if their needs continue evolving.

(French, R et al, 2008 Organizational Behavior p160)

Fredrick Herzberg’s cleanliness inspiration hypothesis, Frederick Hertzberg set forward the possibility that specific factors in the work environment cause work fulfillment, while others lead to disappointment, he proposed the ‘Two Factor hypothesis’ of human inspiration in the work environment, he accepted that man has two arrangements of requirements one as a creature to maintain a strategic distance from agony and the second as a person to develop mentally. Hertzberg accepts that the development or the helper factors, for example, accomplishment, the work its self, duty and progression are the essential driver of employment fulfillment.

Cleanliness factors the dissatisfiers utilizing the expression “cleanliness” are viewed as support factors that are to evade disappointment yet without anyone else’s input don’t give fulfillment organization arrangement, organization, supervision relational connections, working conditions pay status and security.

Hertzberg utilized two open finished inquiries ‘enlighten me regarding when you felt uncommonly great about your activity.’ and ‘educate me concerning when you felt astoundingly terrible about your job’.Herzberg dissected an assorted scope of workers twelve unique examinations educated the hypothesis.( Herzberg et al 1959,. Wilson, F M(2004) Organizational Behavior and work)

There have been numerous reactions of this hypothesis one being a few specialists have utilized different techniques and have not had the option to affirm the hypothesis there for the hypothesis is said to be strategy bound as just Hertzberg’s unique technique can bolster the hypothesis. Different faultfinders observed it to be too helpful that Hertzberg’s hypothesis fits so flawlessly into two boxes, natural adding to work fulfillment and extraneous to disappointment. In the examination by Ewan (1963) found that occasionally the cleanliness factor, disappoints went about as satisfiers and satisfiers, sparks caused both fulfillment and disappointment. (Wilson, F M(2004) Organizational Behavior and work)

Taking a gander at the most notable inspirational speculations David McClelland Need for Achievement Theory suggested that a person’s particular needs are gained after some time and are molded by a people beneficial encounters. A large portion of the requirements can be classed as accomplishment, association, or power. An individual’s inspiration in a specific occupation is affected by these three needs. McCelland accepted that having the correct assets accessible, for example, crude materials, time, having the correct aptitudes to carry out the responsibility and furthermore having the important help to take care of business like administrator support, or right data at work, McCelland accepted that regardless of whether two of the three were met that there would at present not be sure inspiration and every one of the three must be met to accomplish positive inspiration. (French, R et al, 2008 Organizational Behavior pp163-165)

The anticipation hypothesis of inspiration is by Victor Vroom. Victor Vroom is altogether different to Maslow and Hertzberg, Vroom centers around results not on requirements. Hope is the conviction that more exertion will prompt better execution.

(French, R et al, 2008 Organizational Behavior pp172-174)

Taking a gander at the hypotheses of inspiration I accept that there are numerous speculations of inspiration as there is neither a set in stone hypothesis all appear to out line the nuts and bolts of inspiration climate it is in a progressive system or set in two boxes we as a whole have a requirement for the nuts and bolts in life in addition to accomplishment, acknowledgment and we as a whole would be more joyful and increasingly persuaded to work in better conditions, I accept that an individual has every single one of these necessities at or perhaps numerous at once so there for some, speculations are basic to get a more extensive learning of inspiration and how to spur a person at work.

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