Financial Accounting

Financial Accounting

Homework 2

3-8

“Accumulated depreciation is the total depreciation expense for the year.”

Accumulated depreciation can be determined as all of the depreciation ever 'accumulated' against the assets currently in service. It is usually calculated for longer periods (3, 5, 10) than a year, that is why I disagree with the statement above.

3-9

“A trial balance assumes that the amounts in the financial statements are correct.”

Of course, I agree with the statement because performing trial balance with not assured amounts from the financial statements would be pointless and might produce an incorrect trial balance.

3-12

“In double-entry accounting, errors are not a problem because they are self-correcting.”

I disagree, because there are some kinds of errors which could affect correctness or even when trial balance is balanced, it does not ensure correctness.  For example, failing to record a transaction, recording the same transaction twice, or posting an amount to the wrong account would produce a trial balance, which is balanced but incorrect.

3-18

1. cr.

2. cr.

3. dr.

4. cr.

5. dr.

6. cr.

7. cr.

8. dr.

9. cr.

10. cr.

3-20

1. dr.

2. cr.

3. dr.

4. cr.

5. cr.

6. dr.

3-23

| Debit | Credit |

b | 8 | 1 |

c | 2 | 3 |

d | 13 | 1 |

e | 1 | 2 |

f | 3 | 7 |

g | 6 | 7 |

h | 3 | 1 |

i | 8 | 1 |

j | 1 | 9 |

k | 5 | 4 |

l | 13 | 1 |

m | 10 | 6 |

3-26

a. Acquired office supplies of $800 on open account.

The Asset Supplies Inventory increases.

The Liability Accounts Payable increases.

Supplies Inventory 800

Accounts Payable 800

Supplies Inventory | Accounts Payable |

800 | | | 800 |

b. Sold a house and collected an $8,000 commission on the sale.

The Asset Cash increases.

The Owners’ Equity Commissions Revenue increases.

Cash...