Basic Fj Financial Accounting & Reporting Worksheet and Financial Statements earning Objectives: aner studying this chapter, you should be able to: 1, Describe the flow of accountin; balance into the adjusted trial statement and balance sheet col 18 Information from the unadjusted trial I balance ‘and finally, into the income lumns of the worksheet. : 2, Prepare accurately and in good form a ten-column worksheet. 3. Understand and appreciate the usefulness of financial statements. 4. Develop skills in the preparation of financial statements. 5. Explain how the financial statements are interrelated. THE WORKSHEET * Accountants often use a worksheet to help transfer data from the unadjusted trial balance to the financial statements. This multi-column document provides an efficient way to summarize the data for financial statements. The accountant generally prepares aworksheet when it is time to adjust the accounts and prepare financial statements. Note, however, that it is possible to prepare financial statements directly from the adjusted trial balance at the end of the accounting period if the business. has relatively few accounts. e worksheet simplifies the adjusting and closing process. It can also reveal errors. worksheet is not part of the ledger or the journal, nor is it a financial statement. It $a summary device used by the accountant for his convenience. The basic structure of orksheet is presented in Exhibit 5-1. ING THE WORKSHEET (Step 5) teps in the preparation of a worksheet will be illustrated using the Weddings “R” e account’ balances in the unadjusted trial balance columns and total there — at May 31 are |; ounts as titles and balances of the acc The numbers, titles Gir, d. The account, wis are prepare Total debits nae ie the adjusting ent! ar in the ledger. Muse Sey from the ledger before 2% St g pt h zero balances (e, gly in the worksheet in the ot Accounts ay Listing all the accor Ree Seameiesshown tn a are also Diced adjustments. This Pract it Preneintens: persis, ihe accounts that ni and accuracy in the adjuss their balances helps , nt of completeness me help ensure the achievem Process. ¥ entries in the adjustments columns ani total the am, ng entries in the adjustment: J and ter the adjustit first entered in the Worksheg ; When a worksheet is used, all i Rea i wee explained in the Previous chan required adjustments for Se the adjustments ee the wor te Ewa mG cat eguieat Is entered, a water ‘the acne f a entry and the corresponding credit entry. Note Ir Sei © nyt journalized until after the worksheet is completed and the financial Statemen Prepared, Compute each account’s adjusted balance by combining the unadjusteq and the adjustm trial balance ent figures. Enter the at balance columns, idjusted amounts in the adjusteg trial Exhibit 5-3 exhibited the adjusted trial balance _line by line, the ai balance; a debi balances a P17,300 debit in the adjusted Spates, on the third line, showed a debit of P18,009 in the unadjusted trial balance ‘umns and a credit Of P3,000 ji a ‘columns, The ps ase aa P15,000 debit in the adjusted ta Teported a P62,400 credit in © adjustments columns. The! Mis entered in the credit colum d through all the accounts. The eck the Accuracy of the fos trial balance.+ ‘add when the type of a ust balance. Ment (debit or credit) i it] subtract when the ty ) is the same as the unadjusted e 4 Pe of adjus unadjusted balance, Justment (debit or credit) is different from the ptend the asset, liability ang palance columns to the bala, amounts to the Income state, owner’. ce Sheet oc guy Tmounts from the adjusted trial ment colui columns. Extend the income and expense mns. Total the statement columns. ery account is either a very liability, capi balance sheet account or an i asset, , capital and withdr, income statement account. al oe accounts are extended to the balance sheet eae are moved to the income statement rate balance remain as debits in the statement ch account's adjusted bal: should i ly one statement col jjusted balance should appear in only ba lumin as shown in Exhibit 5-4. At this stage, the initial totals of the inc ‘ment and balance sheet columns are not equal columns. Income and expense columns. Debits in the adjusted columns while credits as credits, ute profit o ae ee es _ a as the difference between total revenues and total expenses in Sead pps Enter profit or loss as a balancing amount in the income statement and in the balance sheet, and compute the final column totals. profit or loss is equal to the difference between the debit and credit columns of the income statement. i Revenues (Income Statement credit column total) P71,700 Expenses (Income Statement debit column total) 36,700 Profit P35,000 The profit or loss should always be the amount by which the debit and credit columns for income statement, and the debit and credit columns for balance sheet differ. The profit figure of P35,000 is entered in the debit column of the income statement and the credit column of the balance sheet. After completion, total debits and total credits in the income statement and balance sheet columns must equal. i d to the credit column of the balance sheet because and increases in owner's equity are recorded as “redits, Observe that the capital account amount of P250,000 shown in the rksheet reflects the beginning rather than the ending balance. Profit must be led and withdrawals subtracted to arrive at the ending capital balance; this is e when the statement of changes in equity is prepared. 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[000 7 [oor Senuanay (ealojou pauleaun| oar \ pose loose a siqeked werawui] ose port — loor'T aigeked saniinn] Ope 1000'S 2iqekeg Saise[es| oer TE oo Braeheg sana) ee jo0'r [ooot fa aqekeg SdjON] OTe [o00’0s juewidinby 83i4j70-udaq ‘N20 SZT ooo [ooo Pa 00°08 wawanby Bio] —OzT joo0’ozy DONOR APIVRA S3IAlas -U% 190 ‘M9¥] SOT loozer oar" 7 SPIUPA 2078S] —O9T 000% Te joor'er Soueinsu1 predsig] ger st foon'e Ps foovsr Weu piedaig] opr TaD looree pore looove saudans| “oer Ta Sa sre) | Wao pay wed | apa looz’zz SENDA SUuNOSy] OFT a Paieipy Te ee WP | ya8G a uses] Orr asnpy Sauer Tea TET InODW “OW Ste Te RW Pe HOR TT a07 ous OM, $0 tie Tuipparyfoou"9e joos"e jsa7e0i| 065 IW |_085 T [ooo (o00r sidag] OLS foo” | [0007 095) [oor [oov’y 055) joozt jor [ooe't Ops. [o00'y [o00"r [0007 OES) [ooo [oo0"e [000"E. ins} 02S jo0s’st loos’st [ooet ors. jooo"y [0007 ooo’ 3 ozr_| [ooz"23, joe jooe’s ory OEE [O00 EF coor | ~Jo00%r semespaum orevenrraied| OZE [ooorose jooorost fe O|eueWFeI0d) OTE [0009 [o00"s 09% loos’€ loose loos" sz foowr [oor joorr ‘ove Joos i [o08'T [008 T Ez [000"ES + [000s 000s Bigeked swunorv] _Oce fooo’orz, -} [o0o°Tz, [ooo"ore Biqehed SjON| OTZ [ooo"t [000 quaudnby s5yjo-wdeg nav] SZE E [ooor0s T quauidinbs 53470] OT [o00"r - [o0o"r SpRPA sanres “udag N2v]_S9T oo0'ozy fee BPIMOA a2100S| OST fooz'er_— “4 ‘Bouemsuj piedasd| OST 000" C e ad [000'st 2 ‘sayedans| _OET je a elit [oOe’S 7 Siqenresay swunozv] Oct [ fooe'ez fooe'ez C ysea] Ort we [| waa para [_uaeo Wa | uaea wpaD We UP: Bp TUNOII “ON Yous aUeIeG quauayers swoou | Souerea lev PeIsnIPY Huswnsnipy ET 0 GrOz Te Kew popua WOW Om 303 JSSUSOM Aa, Suppoime eee ere ee oe TU P15,600 Expenses Salaries Expense 4,400 Utilities Expense 4,000 Rent Expense 4,000 Depreciation Expense-Service Vehicle 3500 Interest Expense 3,000 f Supplies Expense 1,200 \ Insurance Expense i 1,000 Depreciation Expense-Office Equipment —— a | Total : — 2200 | : P35,00 Profit \ 000 | Exhibit $5 Income Statement. Information about the performance of an enterprise, in ‘particular its Profi Tequired in order to assess potential changes in the economic resources tha to control in the future. It is also useful in predicting the capacity of the en Benerate cash flows from its existing resource base. Statement Of Changes in Equity The statement of equity, This © from additions| Decreases result from ie beginning balance and int in the 8eneral ledger, income Statement while the ksheet. Weddings “p» Statement of en US P285,000. 14,000 P271,000r atom of Financial Position Worksheet ang ‘nancial Statements | e statement Of finan Al posit iti al i ;, ion ition of n entity by listi Sa Statement that sh te. The information ne, ets, labilties a lows the fi jod, rather than the total for the S statement ah Owner's in icalso called the balance sl Period as j ‘i sal heet, the ing nancial position or equity as at a specific 'e net balances at the end of the ‘Ome statement. This statement ers of financial Statements anal ‘ ibili 'Y2e the b; its financial flexibility, and its =n/e alance sheet toe ity’s liquid vis to the availability oF as| shy to generate Profits, a ae ‘wa commitments over this perigg, ina © near future after taking account of the financial woater the amounts and timings of en extty is the ability to take effective actions reeds and opportunities, thy. includes jos $9 that it can respond to uneepected unused lines of credit, Solven; eee ility to raise new capital or tap into . ref an mneet financial commitments 2 they fala” availability of cash over the longer term to h Eouiecoe sheet I tiay not belt esry +9 make any further analysis of — oc! data—that is, the balances of the asset, liability, and owner's equity accounts—are already available from the balance sheet columns of the worksheet. However, the interim balance for owner's equity must be revised to include profit or loss and owner's withdrawals for the accounting period. The adjusted amount for ending owner's equity is shown in the statement of changes in equity. Format : The balance sheet can be presented in either the report format or the account format. The report format simply lists the assets, followed by the liabilities then by the owner's equity in vertical sequence. The account format lists the assets on the left and the liabilities and owner’s equity on the right. Either balance sheet format is acceptable. revised: PAS No. 1 does not prescribe the order or format in which an entity nts items in the statement of financial position; what is required is the current and irrent distinction for assets and liabilities. Assets can be presented current then Tent, or vice versa. Liabilities and equity can be presented current liabilities then nt liabilities then equity, or vice versa. to present a classified balance sheet; that is, the assets and liabilities are into various categories. Assets are sub-classified as current assets and non- ; abilities as current liabilities and non-current liabilities, At this See read chee teiiors ot tie foresee (iors Chapter 2). gb a in the analysis of financial statement data. lance sheiting INnrormation that is ates accoun' fiquidtY provides entity shall present aj ass, ion based on NaN then When presentation bas aananal ; ard more relevant to decision tt le, of liquidity. Cash ; liabilities in order of liquidity. reasing are listed last, liabilities in - oe ed in deci f if jert time of maturi Assets are classified and seo be cv ted based on tim: Y sucy liquid, Assets that are at ‘ed and el 7 Liabilities are generally tly due are liste spate obligations which are current assets of P546,700 in the bay ance : Coles lance sheet colymn® Shey : 5-7 that the in the ba Sof It can be cher eee aaea ine and owner's equity dg ny does not tal ikewise, the total hese differen uy worksheet in Exhibit 5-4. pagal The reason for tl fe ie the total credits in the sam thay lateq ibtracted from their re} coup drawals are sul in the works accumulated deprecation Se a respective vento feet. 1 in the balance sheet t ort : classed balance sheet of Weddings “R” Us in reps aay "S 'S the My h tha, Weddings “R” Us Balance Sheet _ May 31,2019 Assets ie amet 22,200 st Accounts Receivable 37,300 * 15,000 Supplies eae 4,000 Paid Rent on Prepaid insurance , Total Current Assets P 71,700 Property and Equipment (Net) Service Vehicles 420,000 Less: Accumulated Depreciation 4000 416,000 Office Equipment 60,0007 Less: Accumulated Depreciation 1,000 Assets PS46,700 Uabilities ee P210,000 Uunts Payable , . laries Payable * 53,000 ilties Payable 1,800 1,400 3,500 —5,000_ Owner's Equity 275,700 2019 271,000 P546,700nt of Cash Flows statement of cash flows provi ft i : Vides ji 4 of an enti inf - ents 7 a ty during a periog, oe about the cash receipts and cash its (inflows) and cash payments four? formal statement that classifies cash vawities: This statement shows the nee into operating, investing and financing spine cash balance at the end ofthe penceane oy Seerease in cash during the period ws of the entity. The discussion below ; it also helps project the future net cash invowed in the preparation of the cash flew aceeea ee ee ae . ent. cosh Flows. from Operating Activities ing activities gene: i ove Jon ae fe Providing services, and producing and delivering eS candother acne eae activities are generally the cash effects of rans. f ‘at enter into the determination of profit or loss. This ash flow can be presented using either the direct or the indirect method. De anee , sing the direct method, the entity’s net cash provided by (used in) operating activities is obtained by adding the individual operating cash inflows and then subtracting the individual operating cash outflows. The indirect method derives the net cash provided by (used in) operating activities by adjusting profit for income and expense items not resulting from cash transactions. The adjustment begins with profit followed by the addition of expenses and charges (eg. depreciation) that did not entail cash payments. Then, increases in current assets and decreases in current liabilities involved in the determination of profit but which did not actually increase or decrease cash, are subtracted from profit. Finally, decreases in current assets and increases in current liabilities are added to profit to obtain net cash provided by (used in) operating activities. Profit P xxx Adjustments for: Non-Cash Expenses (e.g. Depreciation) sax Increases in Current Asset Accounts (x) Decreases in Current Liability Accounts (x) Decreases in Current Asset Accounts x Increases in Current Liability Accounts x Cash Flows from Operating Activities P Xxx r example, increases in accounts receivable from ‘sale of services or goods resented an increase in profit without the corresponding increase in cash—for itis @ receivable. Since these revenues are already included in the computation of fit, the increase in accounts receivable should be deducted from the profit figure. To te further, assume that salaries payable increased. Increases in salaries payable that the entity did not pay the full amount of salaries expense for the period.a flow purposes, is verse, for cash fit i Atay statement, ted, then profit is Understar | by The expense in the ee expense is ae is added to profit, "Stateg wh amount of ae rete in current liability 4 Same amount; hence, enterprises are €Ncoura, Per Philippine Accounting Standards (PAS) No: 7, Inge to tivities using.the direct method but the Mdiregy ok Cash flows from operating a Rh follows Meg ly the direct method is ustrated | ae The following are thet acceptable. Only the me' * iy, classes, of operating cash flows using the direct Cash Inflows f services | : ret from sale of goods and eae other revenues | * receipts from royalties, fees, commissions | Cash Outfiows 4 + sine to suppliers of goods and services * payments to employees * payments for taxes * payments for interest expense, * payments for other operating expenses Cash Flows from Investing Activities Investing Activities include making and collecting loans; investments in debt OF equity securities; and obtaining quipment and other acquiring and isposin, Productive assets, and selling of Property ant Cash inflows : * receipts from sale Of property and equipment * receipts from sale of investments in debt or equity securities * receipts from Collections on Notes receivable Cash Outflows * payments to acquire Property and equipment © payments to acquire debt or equity Securities * payments to make loans to Others, 8enerally in the form of ni ‘otes receivable receipts from investments ceipts from issuance Of noWeddings “R” Us fa pe of Cash Flows r the Month Ended May 31, 2019 ost Flows from Operating Activities: cash received from clients payments to suppliers Pp se payments to employees (20,000) ents for office rent . (13,800) payments for insurance ih payments for utilities (3,000) P 11,200 Net cash provided by (used in) operating activities sh Flows from Investing Activities: payments to acquire service vehicle P (420,000) payments to acquire office equipment (15,000) Net cash provided by (used in) investing activities (435,000) cash Flows from Financing Activities: Cash received as investments by owner 250,000 ; Cash received from borrowings 210,000 payments for withdrawals by owner 4 (14,000) > net cash provided by (used in) financing activities 446,000_ Net Increase (Decrease) in Cash > P.22,200 Cash balance at the beginning of the period Rusan Cash balance at the end of the period P. 22,200 Exhibit 5-8 Statement of Cash Flows RELATIONSHIPS AMONG THE FINANCIAL ST. ‘ATEMENTS based on the same underlying data and are fundamentally The financial statements are hows the basic interrelationships among the financial related. The following s Date at End of Period Statement of » Financial Position Income Statement ‘Statement of Cash FlowsJONG OF eae iS Site, BOSC Financial Accounting and Rep enses during the pe. ! 1 reports all income ia ba tio The + The income statement statement, Profit or loss is the final figure in this iders the profit or loss figure To, ity considers e my 2. sine ene ere vreernining factors that explains the chon income statement a: SSS owner's equity. ending owner's o, ui ial position reports the aan ake, 3. The statement of financial pe es in equity. directly from the statement of chang i r decrease jn Cash the net increase o Sh dug . it of cash flows reports in the balan, ng : the period and ends with the cash balance reported) oe ee Sheet. qe statement is prepared based on information from lent ang the balance sheet, —_ = DISCUSSION QUESTIONS 1. Inwhat Ways is the worksheet useful to accountants? 2. Discuss the steps in preparing a worksheet, 3. After accomplishing the worksheet, the debit and credit columns of the trial balance, adjustments, adjusted trial balance, income statement and balance sheet balance. Does it ‘mean that the worksheet is free from error? Prove Your answer, What useful information does an income statement provide to the business Owner? 5. What are the obje Jectives achieved in the Preparation of the statement of changes in equity? from income statement to eet and to Statement of cash flows:Worksheet and Financial otOve ss ‘l inthe Blanks N gjustments are the result of transactions. will —— ill increase accumulated depreciation. affes i ‘ct both the income statement and balance sheet. the adjustment for supplies reflects the amount of supplies eee lies Expense i i plies Expense is found on the income statement. Supplies are foun 5. 5uP don a . eee . pepreciation Expense is found on the reflects the cost of equipment at time of purchase. . —_—_—_ is a contra asset that has a credit balance. accumulated Depreciation, a contra asset, is found on the 3 reflect the book Historical or original cost of a vehicle less value of the vehicle. ¥. _ column of the balance sheet 41. Withdrawals are found in the section of the worksheet. Salaries Payable is a liability that will appear in the of the worksheet. 13. The figure for Profit on the worksheet is carried over the of the balance sheet. column 14. Aworksheet is a(n) report. prepared after the completion of the worksheet. b. are reports how well a business performs for a period 16. The is a report that shows changes in capital. jing figure for capital from the statement of changes in equity is placed onTrue or False he statement of financial Position, own as the be assessed by referring to a balance sheet, 2. Financial position may mi 3. The heading for an income statement | 1, The balance sheet is also kn‘ | 2019." ight include the line "As at Decemy i, 5 tatement to th, ement ii ity relates the income s\ e Sy 4. The stat it of changes in fee cil account changed during the acco sheet by showing how the owni Period. 5S. The statement of changes in equity discloses the withdrawals du: ring the eto, The purchase of equipment isan example of a financing activity. 7. Financial statements cannot be Prepared correctly until'all the accounts have bes adjusted. 8. Total assets, total liabilities the totals of the Balance 's and owrier's equity on the bal: ance sheet are the Samex Sheet columns on the workshee! The worksheet is Prepared after the formal adjusting and closing entries, e balances of the Accu of the worksheet's Bi mulated D, epreciation a alance She, counts will appear on the cred! et columns.Worksheet and Financial Statements | 5-19 qhe worksheet is a type : of Accountant's ‘Working paper. qhe amount placed opposit | ® columns of the worksheet aes Owner's Capital account in the Balance Sheet palance sheet. Smount to be reflected for owner's Capital on the hase my yp The pure! of land is an exa Ple of an investing activity. jount of owner's wi ~ , The amount of owner's thdrawals'can be found on the worksheet. The balance sheet may # ¥ be prepared by referring solely to the Balance Sheet " columns of the worksheet, pu. The worksheet should be prepared. Prepared after the formal financial statements have been yi. The amount for owner's Withdrawals will i ofa worksheet. I appear in the Income Statement columns n. Buying and producing goods and services are examples of operating activities. 23, The statement of cash flows discloses significant events related to the operating, investing, and financing activities of a business, 24, When adjusting entries are entered onto a worksheet, it is not necessary to record them in the general journal. 3, An important use of the worksheet is as an aid in the preparation of financial statements. 46. The Adjusted Trial Balance columns of the worksheet are prepared by combining the "Trial Balance and Adjustments columns of the worksheet. hen the Income Statement columns of the worksheet are initially footed, they uld be out of balance by the amount of profit or loss. account Commissions Earned would appear on the balance sheet. unt Wages Payable would appear on the income statement. eet is more useful for a small entity than for a large one.> Multiple choice ion is not found in fi 1. Which of the following types of information is no iNancial stay bs ents Profits Revenue Selling prices Assets anos Accounting data flow from the Balance sheet to the income statement s equi Mcome statement to the statement of owner's eqi ity St ‘atement of owner's equity to the balance sheet Both band care correct. apogee Consider the Steps in the accounting cycle, Provides information to help a business decide Post-Closing Trial Balance Adjusting Entries Closing Entries Financial Statements Which part of 4 Ie ac ir hi Counting Oe whether to expand its Oper; ations) poo * Which columns Of the accounting work sheet show unadjusted amounts? . Trial Balance by Adjustments Income Statement | Balance Sheet heet show Profit? a. Trial Balance Adjustments Income Statement | Bothbandeies has a P60,000 Unadjusted bai . Es nt supplies of P20,000. What adj lance on your trial balance. At year-end you istment will appear on your work sheet? “supplies P: Supplies Expense 40,000 ; 40,000 ie Supplies Expense Supplies 20,000 : 20,000 «Supplies Expense Supplies 40,000 a No adjustment i a pre ssnee is needed because the Supplies account already has a £ which of the following is a cash inflow from financing activities? a. Receipt from collections on notes receivable. bp. Receipt from interest on notes receivable, ¢. Receipt from issuance of notes payable. g, Receipt from sale of property and equipment. Inthe adjusted trial balance, the owner’s equity account reflects . the beginning-of-the-period balance. .. the increase to income and expense. the period ending balance. |, the results of adjusting entries. eose 40. Which of the following steps comes first in worksheet preparation? a. Compute each account's adjusted balance by combining the trial balance and adjustment figures. b. Compute profit or loss as the difference between total revenues and total expenses on the income statement. c. Enter the account balances in the unadjusted trial balance columns and total the amounts. - d. Enter the adjusting entries in the adjustment columns and total the amounts. if the income statement debit and credit columns are not equal after adding the respective columns, an error has been made. ‘the entity either generated a profit or incurred a loss. the entity generated a profit. e entity incurred a loss. i liabilities must exceed the assets.Le ssheat Canin’ Ss the worl umn of 12, it co! The Income Statement Debit a. asset account balances. : b. expense account bane oe ¢. contra asset account balat d. lability account pean . revenue account balances. i Income St ill appear on the debit side of the Income tatement ay, 13, The amount of profit will a ‘on a worksheet, be wil als. a. if profit exceeds the owner's ee the period. b. iftotal assets exceeded total liabili Eee the eevee c if total expenses exceeded total revent for thé par 4. iftotal revenue exceeded Se ©. if withdrawals have been made during 14. IF total credits exceed total debits in the Balance Sheet columns of a Worksheet a loss has occurred. @ mistake has been made. @ profit has occurred. assets exceed liabilities. No conclusion can be drawn until the closing entries have been made, aooe 35. In which columns of a worksheet would the adjusted balance of Accumulaty Depreciation appear? a. Adjusted Trial Balance Cre b. Adjusted Trial Balance Credit, income Statement Credit ¢. Adjusted Trial Balance Debit, Balance Sheet Debit Trial Balance Credit, 1 Adjustments Credit, Adjusted Trial Balance Credit, ani Balance Sheet Credit Trial Balance Debit, Adjusted Trial Balance Debit dit, Balance Sheet Debit 16. Worksheets are Prepared because a. they aid in the Preparation of the financial Statements, adjusting entries, #! closing entries, i they are necessary for the Preparation of the financial statements. they are required by generally accepted accounting principles, they constitute permanent Oe Tecord of alj adjusting entries made for the pet in the current Period, the total of the balancest®* will be balance sheet debit column, ‘income Statement Credit cols. Assuming an entity is Profitable j Credit column in the Worksheet larger than the _larger than the"4. smaller than the balance sheet debit co} jumn. s Worksheet and Financial 2 Pe torger than the income statement debit ca column. qhe usefulness of the worksheet is in aiding the preparation of financi; : gth cial stat identifying the accounts that need to pale a b ‘ summarizing the effects : f Sof the above. Of all the transactions of the period. initié im the Le sul i the balance sheet credit column on a worksheet is greater than the initial sum of the balance sheet debit column, then loss occurred during the period p, anerror was made on the worksheet. the sum of the income statement credit column must income statement debit column. q. allof the above. exceed the sum of the statement of changes in equity has no relationship with the balance sheet. b. indicates whether the cash position of the entity will permit wit! owner. : provides a link between the income statement and the bal d, shows the income and expenses of the entity fora given period. hdrawals by the lance sheet. |. Which of the following is an example of an investing activity? a. Obtaining a bank loan b. Paying taxes to the government ¢. Producing goods and services d. Purchasing a building Which of the following is an ‘example of a financing activity? a. Acquiring land . Employing workers _¢. Paying off a loan Selling equipment statement of changes in equity would not show revenues and expenses. ‘the owner's ending capital balance. e owner's initial capital balance. ° ‘owner's withdrawals for the period.Ballado ag by Prof We ting. ing ond RECS statements excent th, ose iancOl SESS ppears in allt ng financial 5-24 | he followi 24, The profit figure 2 sheet. a. balances! ; e statement b. incom tof cash flows. é statement of changes In equity. 5 yws would disclos 25, Thestatement of cash flo in the financing activi b. inthe investing activitie c._ inthe notes to the finan d, inthe operating activities 5 e the withdrawal of cash by the Orin jes section. 5 section. cial statements. ection. ing activity? 26. Which of the following is an ‘example of an operating a. Obtaining capital from owners: b. Purchasing equipment c._ Selling goods and services to customers d, |. Selling land 27. The owner's Capital account is found on the ‘a. balance sheet debit column and nowhere else. b. trial balance credit column, adjusted trial balance credit column, and balatc sheet credit column of a worksheet. : ¢. trial balance credit column, adjustments credit column, adjusted trial balang credit column, and balance sheet credit column of a worksheet. d. trial balance credit column and income statement debit column of a worksheet e. trial balance debit column, adjustments debit column, adjusted trial balan: credit column, and income statement credit column of a worksheet. . Ifthe amount of profit for the current : Period is less than cownets withdrawals, there will be a(n) al 3. decrease in the Cash account, b. decrease in the owner's Capital account. ’ increase in liabilities on th i e balance increase in the Cash account. oe =. increase in the owner's Capital account. for Jeffrey Franco's Treasures is P2so, P30,000 per mo; eh for personal 000 for the current year. The o™” i t will show a n living expenses. The owner's“increase of P110,000, Ss = increase Of P360,000, which of the following is a cash Outflow fi TOI Stee, payment for interest expense ™ operating activities? : payment to acquire Prope payment to settle notes Cae equipment. de payment to owners in the form of withdra : wals, o trial balance debit i. gy Mm °F credit amount of each account is combined with the amount of any debit or credit adjustmen tt balance of the account. This process is know ae account to determine the new a. balancing. p. cross-footing. c. footing. d. totaling. 4. which of the following comes first in the accounting process? journalizing external transactions preparation of an adjusted trial balance preparation of an unadjusted trial balance worksheet preparation aoe 3. Which two steps in the accounting cycle are aided by the preparation of a worksheet? : adjusting the accounts and preparing financial statements analyze source documents and preparing financial statements posting journal entries and adjusting the accounts journalizing transactions and closing the accounts pose 34. Posting a P3,000 debit as a credit causes an error c. thatis divisible by 9. a, inthe journal. d. that is divisible by 2. b. known as transposition. the following information to answer questions 35 to 39 below. Villanueva Realty ithe following balance sheet accounts and balances: Accounts Payable 60,000 Equipment 5 ‘70,000 Accounts Receivable 10,000 Arlyn Villanueva, Capital ? Building 2? land 70,000 , 30,00035. 36. 37. 38. 5-26 | Basic Financial BP op : id i 1g account. were paid in cash, what woul was P80,000 and P30,000 of Accounts Pai unt was pai 0,000, what w, ou ital acc le be If the balance of the balance of the Buildint 250,000 40,000 90,000 210,000 ),000, what would by tance of the Building aecount was P170 a) alance o! Y 3 If the bi wner's equity? liabilities and 0 a, P170,000 b, P270,000 cc. P320,000 d. P350,000 If the balance of the Building account was p150,000 and the equipment was so. 70,000, what would be the total of owner's equity? a. P150,000 b. P160,000 c. P270,000 d. P330,000 If the balance of the Building account was-P140,000 and P30,000 of Accous t A | Payable were paid in cash, what would b if i e) . ld be the balance of the Villanueva, Capit’ a. P210,000 b. P260,000 ©. 320,000 d. 340,000 wuld ¥ a. P140,000 he the total liabilities and owner's equity? - P180,000 P190,000 . P230,000- — mean eet and Financial Statements | 5-27 amet reset Extensions ify each of the accoun ts listed b wok revenue (R), oF expenses (E). Hi ‘OW as assets cate the norm: ‘Ount will a (A), liabilities (L), owner's equity val debit or credit balance of each PPear in the Income Statement columns. count, Indicate whether each ace il orthe Balance Sheet columns (B) Of the work sheet, Income Statement Account Classificat Normal or Balance Sheet ification Balance Columns imple: Rent Expense 7 pane E Debit 1 2. Accounts Receivable p. Depreciation Expense-C. Eqpt. ¢. Accounts Payable d, Supplies e. Computer Equipment f. Christopher Biore, Capital g. Accum. Depreciation- C. Eqpt. h. Christopher Biore, Withdrawals i Consulting Revenues - j. Prepaid Insurance haps! & PAP IO S bei-le POSSer PeProblem #2 Permanent or Temporary Accounts | anent or temporary, ang in dicate Classify the accounts listed i aa the financial statement jn Which catty Not each account is closed, Also, in ws Will appear. Closed Balance ies Account Title Permanent | Temporary | Yes te See sh ey ~BEMbe: Bulging 7 Xx xX ~2 Rent Expense ~B Prepaid insuranee ary? z £. Accounts Receivable x : 2. Supplies Expense re ; $ Accum. Depreciation F/F Xk f x £. interest Payable % : 8 Service Revers * x : ee h. Notes Payable x i. Depreciation Expense-f/F ale z z meee Problem #3 nsion of Account Balances to Proper Worksheet Columns 11. Accounts Receivable 2 Buildings 12, Interest Expense Salaries Expense 20; nts Payable — 13. Interest Revenues 4. Mortgage Payable 14, Unearned Revenues Ss. Prepaid Insurance 15. Office Supplies 6. Equipment 16, Withdrawals fence Utilities Expense vv. Interest Payable eee a 18, Accum, Depreciation-Bldg. rama seme renues 1g. Rent Expense —— laries Payable in eath the worksheet the amount in i eine the following letters: 9, income statem edit; c. balance hi Sheet, debit; q, balance sheet, credit.went! " atstect Preparation 1, 2019 trial mre ways "balance for Rosalina Besario Surveyors is presented as follows: Rosalina Besa rio Surveyors Trial Balance May 31, 2019 Cash Accounts Receivable P 210,000 Prepaid Advertising 930,000 Engineering Supplies 360,000 survey Equipment 1 Snane Accum. Depreciation-Su i co pccounts Payable UP #240000 Unearned Survey Revenues ea Notes Payable 500,000 Besario, Capital 1,120,000 Besario, Withdrawals a 700,000 “one Survey Revenues 6,510,000 Salaries Expense 3,270,000 Rent Expense 960,000 Insurance Expense 250,000 Utilities Expense 160,000 Miscellaneous Expense 80,000 Totals P9,080,000 _ P9,080,000 _ The following information p end, salaries in ‘of P60,000 on tl pare the adju: ertaining to the year-end adjustments is available: The P360,000 prepaid advertising represents expenditure made on Nov. 1, 2018 for nthly advertising over the next 18 months. unt of the engineering supplies at May 31, 2019 amounted to P90,000. jation on the surveying equipment amounted to P160,000. ‘ird of the unearned survey revenues has been earned at year-end. mount of P140,000 have accrued. thea es payable has accrued at year-end. he not stments on the worksheet and complete the worksheet.———= | NAME: SECTION: Problem #5 jondo} Comprehensive Problem sal balance of the Moises Dondoyang Mot al adjusted tria’ © oy Presented below is ie ui a 31, 2019: Systems for the year adoyano tformation Systems Moises Oe ae seg Trial Balance Dec. 31, 2019 P 45,000 360,000 Cash Notes Recelvable 156,000 Accounts Receivable 63,000 Office Supplies 300,000 land , 1,590,000 ildit ‘ P 254,000 pommel Depreciation-Building : add Equipment pccomulated Depreciation-Equipment paaee Pesala : 450,000 Unearned Consulting Revenues eo Dondoyano, Capital, 1/1/2019 : 655,000 Dondoyano, Withdrawals 600,000 Consulting Revenues 2,108,000 Salaries Expense 875,000 Repairs Expense 116,000 Miscellaneous Expense : 37,000 ¢ — Totals 6,292,000 6,292,000 292,000 Additional information: Office supplies on hand as at Dec, ._ One-third of the unearned Tevenu Depreciation for the year amouny F. 31, 2019 is P21,000. gether with a 20% interest on Ma Tes 3). Si m9 4 is 41.4 er account for each iF the account inthe u d Post the adjusting entri ; Nadjusted trial balance: ies, ted trial balance,yg em #6 or “events on Financial Statements 2018, the acc . pee. 34, 2028, the accounting re 8 53 ined the following balances: cords for Esperanza Nolasco Outdoor Ad ConcePts assets F quities h P180,000 ons Receivable 110,000 Accounts Payable p 34,000 nd - 90,000 Nolasco, Capital 346,000 fa 380.000. Total 380,000, —_—_— refallowing accounting events apply to 2019: san iors additional cash investments from the owne?- 1 Purchased a service vehicle that cost P80,000. The vehicle has 2” p8,000 salvage value and a 3-year useful life. Borrowed P100,000 by issuing a note that carried a 9% annual interest rate and a 1-year term. 1 Paid P24,000 cash in advance for a 1-year lease for office space. Mar. 1 Nolasco withdrew P30,000 for emergency April 1 Acquired land that cost P70,000 cash. May 1 Made a cash payment on accounts payable amounting to 15,000. July Received P42,000 cash in advance as a retainer for services to be performed monthly over the coming year. Sold land for P100,000 cash. The lan originally cost 90,000. Purchased P20,000 of supplies on account. Purchased a 1-year 50,000 certificate of d annual rate of interest. Total earned service rev sh collections from accoun' ses on account during the year that ‘feb. personal use. Sept. 1 Oct. 1 Nov. 1 leposit that paid a 6% account) for the year, 250,000. enues (on ts receivable amounted to Dec. 31 : 31 Total ca: P200,000. 31 Incurred other operating expen’ a3 amounted to pgo,000. Accrued salaries amounted to P32,000. ined on hand at the end of the period. 1,000 of supplies rem oul xy 2aee the following questions, AN 7 Based on the preceding information, answe! au Pertain to the 2019 financial statements. - What is the total amount of revenues appearing on the income Statement, J What is the amount of supplies expense that would appear on the income jtatement? na is the amount of interest expense that would appear on the income statement? 4, MUhat is the amount of rent expense that would appear.on the income statement? 5/ What is the amount of total expenses that would appear on the income Statement? 6. MWvhat is the amount of the gain from the sale of land ‘appearing On the income Statement? ' ve on the statem ent of cash lows? 2 i 12. fat is the amount of Net cash flow from ve Sti ci a es tha ae 8 activities th t would appe: Mount of cash flow ingn fi Of cash flo) from financing activities that would appear onm #7 ple ancl Statements ate whether each “ indica of the followi moment of changes in equi following would appear i ty or Balaneerchee ne ae on the income statement, the sa Mortola Skincare. Item Zxample: Total liabilities at the end of th e year. Supplies on hand at the end of the year. Total insurance expired during the veal ‘Accounts receivable at the end of the year. Total revenues earned during the year. Total withdrawals by the owner. The book value of the entity's equipment. The amount of depreciation taken on equipment during the year. The cost of supplies used during the year. Owner's. equity at the beginning of the year. Profit for the year. Balance Income Sheet x ‘Statement of Changes Statement _|_in Equity \. \ \ \ t \ it \ { rai \ \ | |NAM SECTION Problem #8 ' a Comparing Income with Cash Flo\ al ‘ was ores Michelle Ogatis Delivery tes quarter of operations, Ogatis Pl Income ‘summary of Transactions ren of whic! - ( formed for customers, pgg0,000, es Behrens end of the qual gonJan. 2, 2029. At the end of Oe ry of her transactions as shown is ing Ploy. ret Computation of * +P880,000 [es eight remained uncollected at the nk, P300,000 (one-year note). i iness: ,000; (c) Service vehicle acquired for use in the business: cost, P90, paid 30% down, balance on credit. (d) Expenses, P360,000, of which one-sixth remained unpaid at the end of the quarter. (e) Service supplies purchased for use in the business, P30,000. One-fourth remained unpaid at the end of the quarter. Also, one-fifth of these supplies were unused at the end of the (b) Cash borrowed from the local ba Salaries earned by employees, P210,000, of which one-| -half remained unpaid at the end of the quarter, ions, compute the_| score: a i PROFESSOR: Pa lem rn ration of the Income st; pre ‘atement and the Statement of Changes In Equity income and expense accounts of e és Not pelo represent the activities for th ra Maniquiz Real Estate Agency, which are listed € month of June 2019: Advertising Expense Commissions Expense P 163,000 Office Supplies Expense 7 475,000 Real Estate Revenues 27,000 Rent Expense 1,250,000 Salaries Expense 48,000 utilities Expense 264,000 Depreciation Expense aa required: % 1, Prepare an income statement for the month ended June 30, 2019. 2, On June 1, 2019, Maniquiz has a P123,000 capital balance. During the month, Maniquiz invested an additional P16,000 in the business and withdrew 250,000 Prepare astatement of changes in equity for the month ended June 30, 2019.PROFESSOR: Problem #10 ; ‘Paration of the Statement of Changes in Equity The capital, withdrawal and income summary accounts for Leonila ce ency are shown in T-account form below. The closing entries have been , Ales Ty the year ended Dec. 31, 2019. Score , Generales, Capital Jan.1 360,000 280,000 430,000 1,280,000re ont ——___iworesson, PROFESSOR: otowing financial infor qe mation is known about thes: N e unrelated entities: Neo Agluy Blugub Benedtcta Beatriz Onate pdb 2018: 7 assets. P450,000 rabilities 235,000 een 290,000 x 140,000 pee. 31, 2019: : ‘assets 480,000 a b 410,000 abilities ? 275,000 190,000 ring 2019: ‘add'l Investments 50,000 15,000 77,500 profit 75,000 a 90,000 withdrawals 25,000 30,000 38, 750 required: 1, Refer to Neo Aglugub: a. What's the owner's equity as at Dec. 31, 2018? b. What’s the owner's equity as at Dec. 31, 2019? . What's the amount of liabilities as at Dec. 31, 2019? 2. Refer to Benedicta Cumagun: at Dec. 31, 2018? ¢. 31, 2019? a. What's the owner's equity as ~b, What's the owner's equity as at Det BY What's the profit for 2019? ts owned by Beatriz O1 3, What's the amount of asse | investments in Placid the amount of additiona! Placido Tuddao 800,000 380,000 - 1,250,000 640,000 *? 120,000 0 nate as at Dec. 31, 2019? lo Tuddao made during 2019?Problem #12 Preparing the Financial Statements it of changes in equity, ang, heet, statemen' in for the balance s! oy The accounts . CPA, are as follows: statement of Alfred Cesar Quinsay, P 63,500 Accounts Payable 198,000 Accounts Receivable 4 110,000 Accumulated Depreciation-Building ot 120,000 Accumulated Depreciation-Office Equip 1,361,500 Auditing Revenues 750,000 Building 118'500 Cash : 55,000 Depreciation Expense-Building : pe Depreciation Expense-Office Equipment . a 193,500 Quinsay, Capital, 1/1/2019 ies aoe Quinsay, Withdrawals 75,000 land ,| Notes Receivable 60,000 Office Equipment 362,500 Office Supplies Expense 96,000 Office Supplies : 28,000 Professional Development Expense 86,500 Rent Expense 52,500 Salaries Expense 735,000 Salaries Payable 30,500 Travel Expense 41,000 Utilities Expense 18,000 During the year, Quinsay investeg additional P22,000 inthe business,v : (a _ a ; ——— by 13 ret of Cash Flows cash received from sal . le of i | © Gash paid for salaries. oe Cash received for interest o1 cosh paid to acquiteanewtrucke cash loaned out to a customer in the form of cash received for services rendered. of ee Cash paid for interest. 5 Cash paid for insurance on equi . equipment. h received t Cas ed from a debtor representing payments of principal Cash paid out to acquire a building. 5 required? categorize each ca: ch flow as (0) for operating, (I) for investing, or (F) for financing. problem #14 Cash Flows from Operating Acti ties-Indirect Method 19. During the year, the le increased by P110,000 in 2019 and a profit of 330,000 in 20 0,000. Accounts receivabl 000. The entity started operations i nt liabilities. t assets and curre imara Andam Business Solutions had entity had depreciation expense of P71 and accounts payable increased by P50, the foregoing are the entity's only curren! wired: rmine the net cash flows fro m operating activities using the indirect method.N ‘SCORE: NAME: SECTION: PROFESSOR: h Flows Crotiem #15 lassi ification of Events on Statement of Cas! n to the operations of Party Consulta entity had the following ceed an oy Ctions Ui following transactions pertal planning entity owned by Eleanor Tan. The the month: 0,000 cash investment from the owner. 5 on account. nses on account. 1. Received a P18 2. Provided P400,000 service: Incurred P220,000 of operating expe! from accounts receivable. he owner of the business. 3. 4. Collected P320,000 cash 5. Allowed a P30,000 cash withdrawal to t 6. Paid P160,000 cash on accounts payable. 7. Performed services for 30,000 cash. 8. Paid P12,000 cash for expenses- Required: : Classify each of these transactions as @ cash flow from operating activities (0A, IA), or financing activities (FA)- Transactions that do not affect h flows should be identified as “nfa”. : _1. investing activities (1. the statement of cas astatement of cash flows. Prepare