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Financial Accounting Chapter 5 Homework Solutions
Financial Accounting Chapter 5 Homework Solutions , Financial accounting is an essential skill for any business professional to have. Chapter 5 of the financial accounting textbook covers important topics such as analyzing financial statements, understanding operating cycles, and calculating financial ratios. To help readers master these concepts, this article provides an overview of the homework solutions for Chapter 5 of the financial accounting textbook. Through these solutions, readers can gain a better understanding of how to analyze financial statements, understand operating cycles, and calculate financial ratios.
Chapter 5 Of Financial Accounting: Homework Solutions
In our last chapter, we took a look at the three different kinds of costs that can occur in running any business: direct costs, indirect costs and mixed costs. We also discussed how to assign costs to the specific goods or services produced by the business, how to allocate those costs across different departments or products and the concept of opportunity cost and why it’s important when you’re assigning costs. In this chapter, we’ll take on another significant aspect of budgeting your business’ finances by looking at the types of budgets you can set up and how to use them effectively in your company.
The Trial Balance
What is a trial balance? The trial balance is a listing of the debits and credits in the accounts in the general ledger. It is sometimes called a statement of account.
This spreadsheet lists all transactions for each account from January 1, 2017 through December 31, 2017. For each transaction, there are two rows: an account name and description column on the left-hand side and then an amount column on the right-hand side. In this example, you can see that we have debits (right) and credits (left) listed for each transaction to help us keep track of where money goes.
At the bottom there is a total columns with a row for every account in order to calculate the balance at any time during our accounting period.
Adjusted Trial Balance
The following table represents the adjustments to the trial balance. In Column A, there is a description of each adjustment. In Column B, there is a description of which accounts are affected by the adjustment. The final column contains a list of how many shares are owned before and after each adjustment. In the Shareholder’s Equity row, it shows that after making these adjustments, 400 shares are still left in total because they had 500 to begin with.
The liabilities now add up to $2,000 due to being able to pay off some more loans in order for them not to have such high interest rates. They also owe $700 in taxes at this time so they have higher liabilities than assets since their liabilities totaled $2,700 and their assets totaled only $2,000.
The inventory for the company is not worth anything because it costs too much money for them when they try to sell it back as one product from it being mixed with other products from different suppliers that don’t want what the company has left anymore.
Adjusting Entries
- The adjusting entry to record the purchase of equipment is as follows:
Accounts Payable 850.00
Equipment 2,000.00 2,850.00
- The adjusting entry to record the purchase of a building is as follows:
Loan Payable 50,000.00
Building 20,000.00 70,000.00
Financial Statements
The following are the solutions to Chapter 5 homework. The first statement is a complete balance sheet, while the second is an income statement.
The following are the solution to Chapter 5 homework. The first statement is a complete balance sheet, while the second is an income statement. The Income Statement for Financial Accounting Chapter 5 (Income Statement)
Total revenue $230,000
Costs and expenses $180,000
Net income before taxes $50,000
Net income after taxes $42,500
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FAQ
What is Financial Accounting?
Financial accounting is the recording and reporting of financial data, generally in accordance with accepted accounting principles. It is one part of the general field known as accounting. Financial accountants provide information about a business’s financial position, performance and cash flows. They analyze past transactions, estimate future profitability and assist managers in decision making by identifying trends or problems on which corrective action can be taken. Financial accountants often specialize in certain industries such as banking, insurance or real estate.
What are the different types of financial statements?
There are three different types of financial statements that a company can use to share their financial information. The first type is the balance sheet. This will show assets, liabilities and equity on one page. The second type is the income statement. This will show revenue, expenses and net income on one page. The third type is called a cash flow statement.
What is the difference between a profit and a loss?
A profit is when the company earns more than it spends, a loss is when the company spends more than it earns. For example, if you spend $1 and earn $2, then you have a profit of $1.