Sample content WEEK 1 Chapter 1 E1-4 1. The accounting method used is Incorrect. Because the cost principle requires that assets (such as buildings) be recorded and reported at their cost. 2. The accounting method used is Correct. Because according to the monetary unit assumption requires that companies include in the accounting records only transaction data that can be expressed in terms of money be included in the accounting records. This assumption enables accounting to quantify (measure) economic events. The monetary unit assumption is vital to applying the cost principle 3. The accounting method used is Incorrect. Because according to The Economic Entity Assumption says that the activities of the entity are to be kept separate from the activities of its owner and all other economic entities. The business is accounted for separately from other business entities, including its owner. The reason for this is that separate information about each business is necessary for g

1. ACC 557 Week 1 Chapter 1 (E1 4 E1 7 E1 11 P1 2A) 100% Scored
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Sample content
WEEK 1
Chapter 1

2. E1-4
1. The accounting method used is Incorrect. Because the cost principle requires
that assets (such as buildings) be recorded and reported at their cost.
2. The accounting method used is Correct. Because according to the monetary
unit assumption requires that companies include in the accounting records only
transaction data that can be expressed in terms of money be included in the
accounting records. This assumption enables accounting to quantify (measure)
economic events. The monetary unit assumption is vital to applying the cost
principle
3. The accounting method used is Incorrect. Because according to The Economic
Entity Assumption says that the activities of the entity are to be kept separate from
the activities of its owner and all other economic entities. The business is
accounted for separately from other business entities, including its owner. The
reason for this is that separate information about each business is necessary for
good decisions. Economic entity can be any organization or unit in society.
E1-7
1. C
2. D
3. A
4. B
5. D
6. B
7. E
8. F
E1-11
For (a)

3. Total assets (beginning of year) $ 97,000
Total liabilities (beginning of year) 85,000
a) Total stockholders’ equity (beginning of year) ……
…………………………………… $12,000
For (b)
Total stockholders’ equity (end of year) $ 40,000
Total stockholders’ equity (beginning of year) 12,000
Increase in stockholders’ equity $ 28,000
Total revenues $215,000
Total expenses 175,000
Net income $ 40,000
Increase in stockholders’ equity $ 28,000
Less: Net income $(40,000)
Add: Dividends 24,000) (16,000 )
(b) Additional investment
…………………………………………………………………………………………….
$12, 000
For (c)
Total assets (beginning of year) $129,000
Total stockholders’ equity (beginning of year) 75,000

4. (c) Total liabilities (beginning of
year)…………………………………………………………………………………$ 54,00
0
For (d)
Total stockholders’ equity (end of year) $130,000
Total stockholders’ equity (beginning of year) 75,000
Increase in stockholders’ equity $ 55,000
Total revenues $100,000
Total expenses 55,000
Net income $ 45,000
Increase in stockholders’ equity $ 55,000
Less: Net income $(45,000)
Additional investment (25,000) (70,000)
(d) Dividends…………………………………………………
……………………………………………………………… $ 15,000
PROBLEM P1-2A
a.
DONAHUE VETERINARY CLINIC
Cash
+
Accounts

5. Receivable
+
Supplies
+
Office
Equipment
=
Notes
Payable
+
Accounts
Payable
+
Common
Stock
+
Retained Earnings
+
Revenues
–

6. Expenses
–
Dividends
$ 9,000
–2,900
6,100
+1,300
7,400
–800
6,600
+2,500
9,100
–400
8,700
–2,800
5,900
000,000
5,900
+10,000

7. $15,900
+
+
+
+
+
+
+
+
+
$1,700
00,000
1,700
–1,300
400
00,000
400
+4,800
5,200
00,000

8. 5,200
00,000
5,200
00,000
5,200
$5,200
+
+
+
+
+
+
+
+
+
$600
0000
600
0000

9. 600
0000
600
0000
600
0000
600
0000
600
0000
600
$600
+
+
+
+
+
+
+
+

10. +
$ 6,000
000,000
6,000
000,000
6,000
+2,100
8,100
000,000
8,100
000,000
8,100
000,000
8,100
000,000
8,100
$ 8,100
=
=

11. =
=
=
=
=
=
=
+$10,000
+$10,000
+
$3,600
–2,900
700
00,000
700
+1,300
2,000
00,000
2,000
00,000

12. 2,000
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