Accountıng I

Yanıt Açıklaması: A sole proprietorship is a business owned and run by one person. They are often small type businesses (e.g. auto repair shops, used-books stores etc.). Usually a small amount of capital is needed and the owner is entitled to all profits. The owner is also personally responsible for all debts and liabilities of business. In short, there is no distinction between the business and its owner, but the accounting records of the business activities are kept separate from the personal records of its owner. The correct answer is D.

Yanıt Açıklaması: Ethics are the humanly devised rules, procedures, and norms to judge one’s action as right or wrong, honest or dishonest, and fair or not fair. In this sense, identifying one’s action as ethical, it must be right, honest and fair.

Yanıt Açıklaması: The correct answer is D. With the increase in the net income of the enterprise, the equity of the enterprise increases and the assets of the accounting equation increase with the increase of the equity.

Yanıt Açıklaması: Depreciable amount is the cost of an asset, or other amount substituted for cost, less than its residual value.

Yanıt Açıklaması: A trial balance is a list of accounts and their balances at a given time. The trial balance proves the mathematical equality of debits and credits after posting.

Yanıt Açıklaması: In cash basis accounting, companies record revenues when they receive the cash and they record expenses when the cash is paid. Cash basis accounting records only cash transactions—cash receipts and cash payments.

Yanıt Açıklaması: Ledger is a record of all the accounts that the company uses the changes in those accounts, and their balances. A ledger is often defined as a book of accounts.

Yanıt Açıklaması: Residual value is the expected value of the plant asset at the end of its useful life. The correct answer is B.

Yanıt Açıklaması: The process of analysing and updating of accounts at the end of the period before the financial statements are prepared is called the adjusting process. All of the statements given in this case are true.

Yanıt Açıklaması: The steps in accounting cycles briefly: • Opening entries based on opening balance sheet • Posting opening entries to ledger accounts • Analyzing and journalizing daily transactions • Posting daily transactions to accounts • Preparing monthly trial balances • Preparing unadjusted trial balance at the end of the period • Adjusting entries • Preparing adjusted trial balance • Preparing financial statements • Closing entries • Preparing post-closing trial balance.

Yanıt Açıklaması: A sole proprietorship is a business owned and run by one person. They are often small type businesses (e.g. auto repair shops, used-books stores etc.). Usually a small amount of capital is needed and the owner is entitled to all profits. The owner is also personally responsible for all debts and liabilities of business. In short, there is no distinction between the business and its owner, but the accounting records of the business activities are kept separate from the personal records of its owner. D is the right answer.

Yanıt Açıklaması: A sole proprietorship is a business owned and run by one person. They are often small type businesses (e.g. auto repair shops, used-books stores etc.). Usually a small amount of capital is needed and the owner is entitled to all profits. The owner is also personally responsible for all debts and liabilities of business. In short, there is no distinction between the business and its owner, but the accounting records of the business activities are kept separate from the personal records of its owner.

Yanıt Açıklaması: In deferred revenue, revenue is recognized after the cash is received.

Yanıt Açıklaması: In accrual basis accounting, companies record revenues when they perform services (rather than when they receive cash) and record expenses when they are incurred (rather than when paid). The correct answer is D.

Yanıt Açıklaması: Revenue recognition principle dictates that revenue is recognized when it is earned not the cash is received.

Yanıt Açıklaması: In cash basis accounting , companies record revenues when they receive the cash and they record expenses when the cash is paid. Cash basis accounting records only cash transactions—cash receipts and cash payments. Basically, it is a simple method. But it prevents businesses from being cautious. Companies adopting cash basis accounting focus only transactions involving cash. Those with no monetary input are not taken into consideration. It is possible to say that cash basis accounting is mostly used by small businesses.

Yanıt Açıklaması: As the end of the period comes, adjusting entries are made to ensure the assets, liabilities and owner’s equity. After the adjustment transactions, adjusted trial balance is prepared, and financial statements are prepared afterwards. After the preparation of financial statements, the company journalizes and posts the closing entries. The final step of the accounting cycle is preparing the post-closing trial balance.

Yanıt Açıklaması: Assets are economic resources controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. The correct answer is A.

Yanıt Açıklaması: Date column includes the dates of transactions. Note that transactions are recorded in chronological order. The titles of the accounts used in the recording and the explanations of each transaction are shown in the next column. References of each account are mentioned. Debit and credit amounts for each account are entered. This is called journalizing. The followings are the items which could be seen in a journal entry: 1. The date of transaction. 2. The debit account title (it shows an increase in assets in this journal entry). Note that, debit accounts are entered first at the left margin of the column. 3. The credit account title (it shows an increase in owner’s equity in this journal entry). Note that, credit accounts are entered on the next line and right margin of the column. 4. Explanation of the transaction. 5. Numerical identifications of the accounts which are used later in posting. 6. Debit amount. 7. Credit amount.

Yanıt Açıklaması: The two basic categories of adjustments can be divided into four different types as follows: Deferred (Prepaid) Expenses Deferred (Unearned) Revenues Accrued Expenses Accrued Revenues