This post addresses accounting questions and transactions.
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1. At the end of the period it is necessary to close all temporary accounts. (1) Explain why this process is required and (2) provide an example of the closing of an expense account, Rent Expense in the form of a journal entry.
2, One must follow the cycle that includes 10 steps to complete the accounting cycle. (1) Explain how the debit/credit rules are used when developing journal entries (10 points) and (2) provide an example of the application of the debit/credit rules in the form of a journal entry.
3. Internal Control Procedures are required to safeguard company assets and to ensure ethical operation of the business. (1) Explain how limited access can satisfy the purpose of internal control and (2) provide an example of how this control could be implemented.
4. Depreciation is a process to allocate the cost of long-life assets to each period's income statement and adjusts the value of the asset on the balance sheet. (1) Explain how the Units-of-Production method is computed (10 points) and (2) provide an example of how this method could be used on a new delivery truck purchased for $25,000 to be used for 100,000 miles with a salvage value of $5,000 for year one only (25,000 miles driven in year one)
5. A business may find that they have access cash required for some future date so will invest some of the cash in short-term investments. Name the three categories of short-term investments and provide a brief explanation of each
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1. At the end of the period it is necessary to close all temporary accounts. (1) Explain why this process is required and (2) provide an example of the closing of an expense account, Rent Expense in the form of a journal entry.
(1) We have to close temporary accounts at the end of a period because it updates the owner's capital account balance. When the temporary accounts are closed, it brings their balances back down to zero. This includes the revenue account, expense accounts (all of them), and the shareholder's draw account. The company can then better track expenses and revenue through the next year because the balances start back down at zero.
(2) Income summary 20,000
Rent expense 20,000
To close rent expense on 12/31/2012.
2, As required to complete Course Project 1, one must follow the cycle that includes 10 steps to complete the accounting cycle. (1) Explain how the debit/credit rules are used when developing journal entries (10 points) and (2) provide an example of the application of the debit/credit rules in the form of a journal entry.
includes 10 steps -- Which are: analyzing transactions, doing the correct journal entries, posting to the GL, preparing a trial balance, preparing adjusting entries, preparing financial statements, journal and post adjusting entries, journal and post closing entries, prepare post-close trial balance, and analyze the financial information.
(1) Explain how the debit/credit rules are used when developing journal entries.
Basically, what you would think of as a credit is actually a debit, and what you would think of as a debit is actually a credit. In accounting, a debit increases the balance and a credit decreases the balance. The accounts that have a normal debit balance are assets, the owner's draw, expenses and losses. ...
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