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Principles of Accounting, Volume 1: Financial Accounting

Exercise Set A

Principles of Accounting, Volume 1: Financial AccountingExercise Set A

Exercise Set A

EA 1.

LO 5.1Identify whether each of the following accounts is nominal/temporary or real/permanent.

  1. Accounts Receivable
  2. Fees Earned Revenue
  3. Utility Expense
  4. Prepaid Rent
EA 2.

LO 5.1For each of the following accounts, identify whether it is nominal/temporary or real/permanent, and whether it is reported on the Balance Sheet or the Income Statement.

  1. Interest Expense
  2. Buildings
  3. Interest Payable
  4. Unearned Rent Revenue
EA 3.

LO 5.1For each of the following accounts, identify whether it would be closed at year-end (yes or no) and on which financial statement the account would be reported (Balance Sheet, Income Statement, or Retained Earnings Statement).

  1. Accounts Payable
  2. Accounts Receivable
  3. Cash
  4. Dividends
  5. Fees Earned Revenue
  6. Insurance Expense
  7. Prepaid Insurance
  8. Supplies
EA 4.

LO 5.1The following accounts and normal balances existed at year-end. Make the four journal entries required to close the books:

EA 5.

LO 5.1The following accounts and normal balances existed at year-end. Make the four journal entries required to close the books:

EA 6.

LO 5.1Use the following excerpts from the year-end Adjusted Trial Balance to prepare the four journal entries required to close the books:

EA 7.

LO 5.1Use the following T-accounts to prepare the four journal entries required to close the books:

EA 8.

LO 5.1Use the following T-accounts to prepare the four journal entries required to close the books:

EA 9.

LO 5.2Identify whether each of the following accounts would be listed in the company’s Post-Closing Trial Balance.

  1. Accounts Payable
  2. Advertising Expense
  3. Dividends
  4. Fees Earned Revenue
  5. Prepaid Advertising
  6. Supplies
  7. Supplies Expense
  8. Unearned Fee Revenue
EA 10.

LO 5.2Identify which of the following accounts would not be listed on the company’s Post-Closing Trial Balance.

EA 11.

LO 5.3For each of the following accounts, identify in which section of the classified balance sheet it would be presented: current assets, property, intangibles, other assets, current liabilities, long-term liabilities, or stockholder’s equity.

  1. Accounts Payable
  2. Accounts Receivable
  3. Cash
  4. Equipment
  5. Land
  6. Notes Payable (due two years later)
  7. Prepaid Insurance
  8. Supplies
EA 12.

LO 5.3Using the following Balance Sheet summary information, calculate for the two years presented:

  1. working capital
  2. current ratio
EA 13.

LO 5.3Using the following account balances, calculate for the two years presented:

  1. working capital
  2. current ratio
EA 14.

LO 5.3Using the following Balance Sheet summary information, calculate for the two companies presented:

  1. working capital
  2. current ratio

Then:

  1. evaluate which company’s liquidity position appears stronger, and why.
EA 15.

LO 5.3Using the following account balances, calculate:

  1. working capital
  2. current ratio
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