Question Details

ACCT 550
WEEK 1
CA1-1 (FASB and Standard-Setting) Presented below are four statements which you are to identify as true or false. If false, explain why the statement is false.
    1. GAAP is the term used to indicate the whole body of FASB authoritative literature
Any company claiming compliance with GAAP must comply with most standards and interpretations but does not have to follow the disclosure requirements.
    3. The primary governmental body that has influence over the FASB is the SEC
    4. The FASB has a government mandate and therefore does not have to follow due process in issuing a standard
E2-7 (Assumptions, Principles, and Constraints) Presented below are a number of operational guidelines and practices that have developed over time.
Instructions
Select the assumption, principle, or constraint that most appropriately justifies these procedures and practices. (Do not use qualitative characteristics.)
(a) Fair value changes are not recognized in the accounting records
Financial information is presented so that investors will not be misled. 
Intangible assets are capitalized and amortized over periods benefited
Repair tools are expensed when purchased
Agricultural companies use fair value for purposes of valuing crops
) Each enterprise is kept as a unit distinct from its owner or owners
(h) Revenue is recorded at point of sale
(g) All significant postbalance sheet events are reported
) All important aspects of bond indentures are presented in financial statements
Goodwill is recorded only at time of purchase
.Periodicity assumption
(m) An allowance for doubtful accounts is established
Reporting must be done at defined time intervals
The use of consolidated statements is justified
P3-1 (Transactions, Financial Statements—Service Company) Listed below are the transactions of Yasunari Kawabata, D.D.S., for the month of September.
Sept.	1	Kawabata begins practices as a dentist and invests $20,000 cash.
	2	Purchase dental equipment on account from Green Jacket Co, for $17,280.
	4	Pays rent for office space, $680 for the month.
	4 	Employs a receptionist, Michael Bradley.
	5 	Purchases dental supplies for cash, $942.
	8 	Receives cash of $1,690 from patients for services performed.
	10	Pays miscellaneous office expenses, $430.
	14	Bills patients $5,820 for services performed.
	18	Pays Green Jacket Co. on account, $3,600.
	19	Withdraws $3,000 cash from the business for personal use.
	20	Receives $980 from patients on account.
	25	Bills patients $2,110 for services performed
	30	Pays the following expenses in cash: 
Salaries and wages $1,800, miscellaneous office expenses $85
	30	Dental supplies used during September, $330.
	
Instructions
    (a) Enter the transactions shown above in appropriate general ledger accounts (use T-accounts). Use the following ledger accounts: Cash, Accounts Receivable, Supplies, Equipment, Accumulated Depreciation—Equipment, Accounts Payable, Owner- Capital, Service Revenue, Rent Expense, Office Expense, Salaries and Wages Expense, Supplies Expense, Depreciation Expense, and Income Summary. Allow 10 lines for the Cash and Income Summary accounts, and 5 lines for each of the other accounts needed. Record depreciation using a 5-year life on the equipment, the straight-line method, and no salvage value. Do not use a drawing account.
    (b) Prepare a trial balance.
    (c) Prepare an income statement, a statement of owner- equity, and an unclassified balance sheet.
    (d) Close the ledger.
    (e) Prepare a post-closing trial balance.
a. T-CCOUNTS and b. TRIAL BALANCE