Chapter 2: Q11QS_b (page 81)
Answer each of the following questions related to international accounting standards.
b. Identify the number and usual titles of the financial statements prepared under IFRS.
There are 4 major financial statements under the IFRS.
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Answer each of the following questions related to international accounting standards.
a. What type of journal entry system is applied when accounting follows IFRS?
Question:Identify the items from the following list that are likely to serve as source documents.
a. Sales ticket d. Telephone bill g. Income statement
b. Trial balance e. Invoice from supplier h. Bank statement
c. Balance sheet f. Company revenue account i. Prepaid insurance
Humble Management Services opened for business and completed these transactions in September.
Sep. 1 Henry Humble, the owner, invested \(38,000 cash along with office equipment valued at \)15,000 in the company in exchange for common stock.
2 The company prepaid \(9,000 cash for 12 months’ rent for office space. (Hint:Debit Prepaid Rent for \)9,000.)
4 The company made credit purchases for \(8,000 in office equipment and \)2,400 in office supplies. Payment is due within 10 days.
8 The company completed work for a client and immediately received \(3,280 cash.
12 The company completed a \)15,400 project for a client, who must pay within 30 days.
13 The company paid \(10,400 cash to settle the payable created on September 4.
19 The company paid \)1,900 cash for the premium on an 18-month insurance policy. (Hint:Debit Prepaid Insurance for \(1,900.)
22 The company received \)7,700 cash as partial payment for the work completed on September 12.
24 The company completed work for another client for \(2,100 on credit.
28 The company paid \)5,300 cash in dividends.
29 The company purchased \(550 of additional office supplies on credit.
30 The company paid \)860 cash for this month’s utility bill.
Required
2. Open the following ledger accounts—their account numbers are in parentheses (use the balance column format): Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128); Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); Common Stock (307); Dividends (319); Services Revenue (401); and Utilities Expense (690). Post journal entries from part 1 to the ledger accounts and enter the balance after each posting.
Key comparative figures for Apple and Google follow.
Apple Google
Current Prior Current Prior
\( millions Year Year Year Year
Total liabilities…….. \)171,124 \(120,292 \) 27,130 $ 25,327
Total assets ……….. 290,479 231,839 147,461 129,187
1. What is the debt ratio for Apple in the current year and for the prior year?
2. What is the debt ratio for Google in the current year and for the prior year?
3. Which of the two companies has the higher degree of financial leverage? What does this imply?
Question:The expanded accounting equation consists of assets, liabilities, common stock, dividends, revenues, and expenses. It can be used to reveal insights into changes in a company’s financial position.
Required
1. Form learning teamsof six (or more) members. Each team member must select one of the six components, and each team must have at least one expert on each component: (a) assets, (b) liabilities, (c) common stock, (d) dividends, (e) revenues, and ( f) expenses.
2. Form expert teamsof individuals who selected the same component in part 1. Expert teams are to draft a report that each expert will present to his or her learning team addressing the following:
c. Using the transaction and amounts in (b), verify the equality of the accounting equation and then explain any effects on the income statement and statement of cash flows.
3. Each expert should return to his/her learning team. In rotation, each member presents his/her expert team’s report to the learning team. Team discussion is encouraged.
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