Chapter 1: Q23DQ (page 29)
What information is reported in an income statement?
Income is the financial statement that reports revenues and expenses.
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Sanyu Sony started a new business and completed these transactions during December.
Dec. 1 Sanyu Sony transferred \(65000 cash from a personal savings account to a checking account in the name of Sony Electric in exchange for its common stock.
2 The company rented office space and paid \)1000 cash for the December rent.
3 The company purchased \(13000 of electrical equipment by paying \)4800 cash and agreeing to pay the \(8200 balance in 30 days.
5 The company purchased office supplies by paying \)800 cash.
6 The company completed electrical work and immediately collected \(1200 cash for these services.
8 The company purchased \)2530 of office equipment on credit.
15 The company completed electrical work on credit in the amount of \(5000.
18 The company purchased \)350 of office supplies on credit.
20 The company paid \(2530 cash for the office equipment purchased on December 8.
24 The company billed a client \)900 for electrical work completed; the balance is due in 30 days.
28 The company received \(5000 cash for the work completed on December 15.
29 The company paid the assistant’s salary of \)1400 cash for this month.
30 The company paid \(540 cash for this month’s utility bill.
31 The company paid \)950 cash in dividends to the owner (sole shareholder).
Required 3. Prepare the statement of cash flows for the current month.
What information is reported in a balance sheet?
Enter the letter A through H for the principle or assumption in the blank space next to each numbered description that it best reflects.
A. General accounting principle
B. Cost principle
C. Business entity assumption
D. Revenue recognition principle
E. Specific accounting principle
F. Matching (expense recognition) principle
G. Going-concern assumption
H. Full disclosure principle
1. A company reports details behind financial statements that would impact users’ decisions.
2. Financial statements reflect the assumption that the business continues operating.
3. A company records the expenses incurred to generate the revenues reported.
4. Derived from long-used and generally accepted accounting practices.
5. Each business is accounted for separately from its owner or owners.
6. Revenue is recorded when products and services are delivered.
7. Usually created by a pronouncement from an authoritative body.
8. Information is based on actual costs incurred in transactions.
Key financial figures for Apple’s fiscal year ended September 26, 2015, follow.
Key Figure \( Millions
Liabilities + Equity . . . . . . . . . . . \)290,479
Net income . . . . . . . . . . . . . . . . . 53,394
Revenues . . . . . . . . . . . . . . . . . . 233,715
Required 1. What is the total amount of assets invested in Apple?
Use the information in Exercise 1-15 to prepare an October 31 balance sheet for Ernst Consulting. Hint: The solution to Exercise 1-16 can help.
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