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    Chart of accounts, trial balance, adjusting entries

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    1) What are the components of the chart of accounts?

    2) What is the purpose of the numbering structure on a chart of accounts?

    3) Why is the structure of the chart of accounts important?

    4) Is the chart of accounts the same for every organization? Explain your answer.

    5) When is the trial balance prepared?

    6) What is the purpose of preparing a trial balance?

    7) What does the trial balance tell you?

    8) What does the trial balance not tell you?

    9) What accounting assumptions necessitate the use of adjusting entries?

    10) What are the differences between prepaids and accruals?

    11) What are the different journal entries associated with booking prepaid insurance and unrecorded insurance?

    12) What accounts are subject to adjusting journal entries?

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    https://brainmass.com/business/trial-balance/chart-of-accounts-trial-balance-adjusting-entries-39109

    Solution Preview

    For definitions, terms etc use has been made of
    1) Financial Accounting by Horngren and Sundem
    2) http://www.netmba.com/accounting/fin/process/

    1) What are the components of the chart of accounts?

    Chart of accounts is normally a numbered or coded list describing all account titles.

    The major categories are:
    Assets
    Liabilities
    Capital
    Revenue
    Expenses

    Within these major categories are items like
    Cash
    Accounts Receivable
    Paid-in capital etc

    A typical chart of account looks like (http://www.sbaonline.sba.gov/gopher/Business-Development/Success-Series/Vol1/Prof/prof10.txt)

    Assets
    100-Cash in Banks
    101-Petty Cash Fund
    102-Accounts Receivable
    103-Inventory
    105-Materials and Supplies
    107-Prepaid Expenses
    108-Deposits

    120-Land
    121-Buildings
    122-Accumulated Depreciation -- Buildings (Credit)
    123-Tools and Equipment
    124-Accumulated Depreciation -- Tools and Equipment (Credit)
    125-Automotive Equipment
    126-Accumulated Depreciation -- Automotive Equipment (Credit)
    127-Furniture and Fixtures
    128-Accumulated Depreciation -- Furniture and Fixtures (Credit)
    130-Organization Expenses (to be amortized)

    Liabilities
    200-Accounts Payable
    201-Notes Payable
    205-Sales Taxes-Payable
    206-FICA Taxes-Payable
    207-Federal Withholding Taxes
    208-State Withholding Taxes
    209-Unemployment Taxes
    220-Long-Term Debt-Mortgages Payable
    221-Long-Term Debt-SBA Loan
    225-Miscellaneous Accruals

    Capital Accounts
    For Corporations
    300-Common Capital Stock
    301-Preferred Capital Stock

    For Proprietorships
    300-Proprietorship Account
    301-Proprietor's Withdrawals

    305-Retained Earnings

    Sales (Revenue) Accounts (Credits)
    400-Retail Sales
    401-Wholesale Sales
    402-Sales-Service
    405-Miscellaneous Income

    Expenses (Debit)
    500-Salaries and Wages
    501-Contract Labor
    502-Payroll Taxes
    503-Utilities
    504-Telephone
    505-Rent
    506-Office Supplies
    507-Postage
    508-Maintenance Expense
    509-Insurance
    510-Interest
    511-Depreciation
    512-Travel Expense
    513-Entertainment
    514-Advertising
    515-Dues and Contributions
    520-Miscellaneous Expenses

    2) What is the purpose of the numbering structure on a chart of ...

    Solution Summary

    Answers to 12 Short Answer Questions on Accounts dealing with chart of accounts, trial balance, adjusting entries, differences between prepaids and accruals, different journal entries associated with booking prepaid insurance and unrecorded insurance

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