SUA Chap er 1 Exam Accoun ing Sys t t t
Wi t t
1. Iden ify he exchanges or adjus men s ha mus be recorded.
t t t t t t t
2. De ermine which accoun balances are affec ed by he exchanges or adjus men s/
t t t t t t
3. Assign proper values o he ransac ions for each accoun . t t t t t
4. Record he ransac ions in he proper ime period. t t t t t
5. Record he ransac ions in he accoun ing records, and summarize hem in o he financial
t t t t t t t t
s a emen s. - ANS-Wha are he five essen ial s eps of recording ransac ions?
t t t t t t t t t
1. ransac ions Occur
T t
2. Prepare Documen s t
3. Record in Journals
4. Pos o Ledgers t t
5. Prepare Unadjus ed General Ledger rial Balance t T
6. Prepare and Pos Adjus ing En ries t t t
7. Prepare Adjus ed rial Balance t T
8. Prepare Financial S a emen s t t t
9. Prepare Closing En ries - ANS-9 s eps in he Accoun ing Process t t t t
1. Sales and cash receip s t
2. Purchases and cash disbursemen s (purchase of goods and services and cash t
disbursemen s, excluding payroll) t
3. Payroll (purchase of employee services and disbursemen s for hose services) - ANS- t t
he hree mos common ransac ion cycles are:
T t t t t
1. Cash
2. Accoun s Receivable t
3. Allowance for doub ful accoun s t t
4. Common S ock - ANS-Balance Shee of A Company affec ed by sales and cash t t t
receip s. t
Perpe ual inven ory subsidiary ledger/ inven ory con rol accoun in GL - ANS- ype of
t t t t t T
subsidiary ledger for perpe ual record for each ype of inven ory t t t
1. I is a lis ing of general ledger accoun balances a a poin of ime, wi h he debi s in one
t t t t t t t t t
column and he credi s in ano her. he o al debi s mus equal he o al credi s. If hey don' , he
t t t T t t t t t t t t t t t
error in he general ledger or rial balance should be correc ed. A rial balance is ypically
t t t t t
prepared whenever a company plans o prepare financial s a emen s. t t t t
, 2. A dis inc ion should be made be ween an unadjus ed and an adjus ed rial balance. An
t t t t t t
unadjus ed rial balance is he lis ing of accoun balances in he general ledger before
t t t t t t
adjus ing journal en ries are made for mon h- and year-end accruals, prepaymen s, and
t t t t
errors. An adjus ed rial balance is he lis ing of accoun balances af er all adjus men s are t t t t t t t t
made. - ANS-Preparing a Unadjus ed General ledger rial Balance t T
The primary reason for preparing adjus ing en ries is o conver from he cash basis of t t t t t
accoun ing o he accrual basis. Mos ransac ions are recorded in he journals on he
t t t t t t t t
accrual basis.An example is recording he purchase of inven ory when he merchandise t t t
is received ra her han when i is paid for. - ANS-Significance of recording adjus ing en ries
t t t t t
1. Adjus ing en ries are prepared only a he end of a period when a company plans o
t t t t t
prepare financial s a emen s. Some companies prepare s a emen s mon hly, o hers t t t t t t t t
quar erly, and some only annually.
t
2. Every adjus ing en ry affec s bo h he balance shee and he income s a emen . t t t t t t t t t t
3. he o al debi s and credi s mus be equal for each adjus ing en ry.
T t t t t t t t
4. All adjus ing en ries are firs recorded in he general journal. No o her journal is used for
t t t t t
adjus ing en ries. t t
5. Each adjus ing en ry is prepared separa ely. t t t
6. Each amoun in each adjus ing en ry is pos ed individually o he appropria e general t t t t t t t
ledger accoun . t
7. Mos adjus ing en ries are no pos ed o subsidiary ledgers. - ANS-Seven impor an
t t t t t t t t
requiremen s in recording adjus ing en ries t t t
1. Prepaid expense
2. Accrued expense
3. Accrued revenue
4. Unearned revenue
5. Es ima ed i ems
t t t
6. Inven ory adjus men - ANS-Six general ca egories of adjus ing en ries
t t t t t t
an expense paid for in advance of i s use. An example is paying several mon hs' ren in t t t
advance. he accrual accoun ing me hod requires ha ren expense be recorded in he
T t t t t t t
period in which he asse is used ra her han he period in which he cash paymen is made. t t t t t t t
Also involves adjus men of bo h an asse and expense accoun . - ANS-Adjus ing En ries: t t t t t t t
Prepaid Expense
an expense incurred for which paymen s has no been made. An example is paying ren t t t
af er i is due. I is he opposi e of a prepaid expense. For prepaids, cash is paid before he
t t t t t t
expense is incurred; for accrued expenses, cash is paid af er he expense is incurred. t t
Also involves adjus ing a liabili y and an expense accoun . - ANS-Adjus ing En ries: t t t t t
Accrued Expense
a revenue earned for which he cash has no ye been received. An example is in eres t t t t t
revenue on a no e receivable. An accrued revenue is similar o an accrued expense, t t
Wi t t
1. Iden ify he exchanges or adjus men s ha mus be recorded.
t t t t t t t
2. De ermine which accoun balances are affec ed by he exchanges or adjus men s/
t t t t t t
3. Assign proper values o he ransac ions for each accoun . t t t t t
4. Record he ransac ions in he proper ime period. t t t t t
5. Record he ransac ions in he accoun ing records, and summarize hem in o he financial
t t t t t t t t
s a emen s. - ANS-Wha are he five essen ial s eps of recording ransac ions?
t t t t t t t t t
1. ransac ions Occur
T t
2. Prepare Documen s t
3. Record in Journals
4. Pos o Ledgers t t
5. Prepare Unadjus ed General Ledger rial Balance t T
6. Prepare and Pos Adjus ing En ries t t t
7. Prepare Adjus ed rial Balance t T
8. Prepare Financial S a emen s t t t
9. Prepare Closing En ries - ANS-9 s eps in he Accoun ing Process t t t t
1. Sales and cash receip s t
2. Purchases and cash disbursemen s (purchase of goods and services and cash t
disbursemen s, excluding payroll) t
3. Payroll (purchase of employee services and disbursemen s for hose services) - ANS- t t
he hree mos common ransac ion cycles are:
T t t t t
1. Cash
2. Accoun s Receivable t
3. Allowance for doub ful accoun s t t
4. Common S ock - ANS-Balance Shee of A Company affec ed by sales and cash t t t
receip s. t
Perpe ual inven ory subsidiary ledger/ inven ory con rol accoun in GL - ANS- ype of
t t t t t T
subsidiary ledger for perpe ual record for each ype of inven ory t t t
1. I is a lis ing of general ledger accoun balances a a poin of ime, wi h he debi s in one
t t t t t t t t t
column and he credi s in ano her. he o al debi s mus equal he o al credi s. If hey don' , he
t t t T t t t t t t t t t t t
error in he general ledger or rial balance should be correc ed. A rial balance is ypically
t t t t t
prepared whenever a company plans o prepare financial s a emen s. t t t t
, 2. A dis inc ion should be made be ween an unadjus ed and an adjus ed rial balance. An
t t t t t t
unadjus ed rial balance is he lis ing of accoun balances in he general ledger before
t t t t t t
adjus ing journal en ries are made for mon h- and year-end accruals, prepaymen s, and
t t t t
errors. An adjus ed rial balance is he lis ing of accoun balances af er all adjus men s are t t t t t t t t
made. - ANS-Preparing a Unadjus ed General ledger rial Balance t T
The primary reason for preparing adjus ing en ries is o conver from he cash basis of t t t t t
accoun ing o he accrual basis. Mos ransac ions are recorded in he journals on he
t t t t t t t t
accrual basis.An example is recording he purchase of inven ory when he merchandise t t t
is received ra her han when i is paid for. - ANS-Significance of recording adjus ing en ries
t t t t t
1. Adjus ing en ries are prepared only a he end of a period when a company plans o
t t t t t
prepare financial s a emen s. Some companies prepare s a emen s mon hly, o hers t t t t t t t t
quar erly, and some only annually.
t
2. Every adjus ing en ry affec s bo h he balance shee and he income s a emen . t t t t t t t t t t
3. he o al debi s and credi s mus be equal for each adjus ing en ry.
T t t t t t t t
4. All adjus ing en ries are firs recorded in he general journal. No o her journal is used for
t t t t t
adjus ing en ries. t t
5. Each adjus ing en ry is prepared separa ely. t t t
6. Each amoun in each adjus ing en ry is pos ed individually o he appropria e general t t t t t t t
ledger accoun . t
7. Mos adjus ing en ries are no pos ed o subsidiary ledgers. - ANS-Seven impor an
t t t t t t t t
requiremen s in recording adjus ing en ries t t t
1. Prepaid expense
2. Accrued expense
3. Accrued revenue
4. Unearned revenue
5. Es ima ed i ems
t t t
6. Inven ory adjus men - ANS-Six general ca egories of adjus ing en ries
t t t t t t
an expense paid for in advance of i s use. An example is paying several mon hs' ren in t t t
advance. he accrual accoun ing me hod requires ha ren expense be recorded in he
T t t t t t t
period in which he asse is used ra her han he period in which he cash paymen is made. t t t t t t t
Also involves adjus men of bo h an asse and expense accoun . - ANS-Adjus ing En ries: t t t t t t t
Prepaid Expense
an expense incurred for which paymen s has no been made. An example is paying ren t t t
af er i is due. I is he opposi e of a prepaid expense. For prepaids, cash is paid before he
t t t t t t
expense is incurred; for accrued expenses, cash is paid af er he expense is incurred. t t
Also involves adjus ing a liabili y and an expense accoun . - ANS-Adjus ing En ries: t t t t t
Accrued Expense
a revenue earned for which he cash has no ye been received. An example is in eres t t t t t
revenue on a no e receivable. An accrued revenue is similar o an accrued expense, t t
