ACC 225 Module 2 Homework Assignment (AIU Online)
Part I: Short Response
1.What are the advantages of a computer-based accounting system? Does such a system eliminate the need for human judgment? Explain.
2.In a double-entry system of accounting, why must total debits always equal total credits?
3.Assume that Company A buys $1,500 of merchandise from Company B for cash. The merchandise originally cost Company B $1,000. What entries should the buyer and seller make and what is therelationship of the accounts
for this transaction?
4.Indicate how each of the following transactions affects the accounting equation.
5.Explain why accrual-basis accounting is more appropriate than cash-basis accounting for most businesses.
6.Identify the two steps involved in the analysis process for preparing adjusting entries and explain why both are necessary.
7.Below is a list of accounts with corresponding balances. Using these accounts, along with the fact that the beginning balance in Retained Earnings is $16,000, compute the ending balance in RetainedEarnings. Note: Not all of
the listed account balances enter into the calculation of Retained Earnings.
8.A lawn care company stated business on January 1, 2012. The company billed clients $105,000 for lawn care services completed in 2012. By December 31, the company had received $84,000 cash from customers, with the $21,000 balance expected to be collected in 2013. During 2012, the company paid $68,000 cash for various expenses. On December 31, the company still owed $41,000 for additional expenses incurred that have not yet been paid in cash. These expenses will be paid during January 2013. How much income (or loss) should the company report for 2012? Note: Thecompany computes income using cash-basis accounting.
10.On December 31, Daniel McGrath completed the first year of operations for his new business. The following data are available from the company's accounting records:
Part II: Application
Directions: Please complete the following problems from your textbook:
- •Problem 4-50 “Account Classifications and Debit-Credit Relationships” (pp. 171-172)