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Unit Review Sheet Answers Chapter 1/Unit 1 Review Sheet 1/Financial Position Answer or complete the following. K, C 1. (a) A financial statement that lists assets, liabilities, and owner’s equity as of a specific date is balance sheet called a(n) _________________________________________________________________ . assets (b) Items of value owned by a business are called _____________________________________ . liabilities (c) Debts of a business are called __________________________________________________ . owner’s equity (d) The owner’s claim on a company’s assets is called _________________________________ . A = L + OE (e) The balance sheet equation is __________________________________________________ . accounts receivable (f) Customers who owe money to a business are called ________________________________ . debtor (g) Another term for accounts receivable is __________________________________________ . A debtor is an asset (h) Is a debtor of a company an asset or a liability? ____________________________________ . accounts payable (i) Companies to whom debts are owed are called ____________________________________ . creditors (j) Another term for accounts payable is ____________________________________________ . A creditor is a liability (k) Is a creditor of a company an asset or a liability? ___________________________________ . K, A 2. Fill in the blanks. = Liabilities + Owner’s Equity (a) $20 000 = $5000 + 15 000 $ __________ (b) $70 000 = 40 000 $ __________ + $30 000 70 000 (c) $ ________ = $50 000 + $20 000 Assets K, A Who? What? 3. The three lines in the heading of a balance sheet answer the questions _____________________ and When? _____________________________________________________________________________ K, T, C to provide information for decision making. 4. The purpose of accounting is ______________________________________________________ _____________________________________________________________________________ Copyright © 2002 Pearson Education Canada Inc., Toronto, Ontario 1 Chapter 1/Unit 1 Review Sheet 1/Financial Position (cont.) 5. Explain the following terms and principles. K, C This is the order in which the assets listed on the balance sheet would liquidity order: _________________________________________________________________ be converted to cash. Long-lasting assets are listed in order of useful life, with the _____________________________________________________________________________ longest lasting listed first. _____________________________________________________________________________ _____________________________________________________________________________ Assets are recorded at the actual cost to the business. cost principle: __________________________________________________________________ _____________________________________________________________________________ Liabilities are listed according to the date they are due to be paid. maturity date rule: ______________________________________________________________ _____________________________________________________________________________ 6. Prepare a balance sheet for the C. Samji Co. using: K, C, A • accepted accounting terminology and procedures; • the form on this review sheet; • the following information for September 30, 20: Cash $2000; Bank Loan $10 000; Amounts Owed by Customers $8000; Office Supplies $900; C. Samji, Capital $105 900; Amounts Owed to Creditors $14 000; Building $200 000; Equipment $9000; Mortgage on Building $90 000. 2 Copyright © 2002 Pearson Education Canada Inc., Toronto, Ontario Unit Review Sheet Answers Chapter 1/Unit 2 Review Sheet 2/Business Transactions Answer or complete the following. At least two. K, C 1. How many balance sheet items are affected by each transaction? _________________________ _____________________________________________________________________________ K, C 2. For each of the following transactions indicate which balance sheet items change and whether the change is an increase or a decrease: Cash, decrease; Office Equipment, increase. (a) Paid cash for a new calculator.__________________________________________________ Cash, decrease; Accounts Payable, decrease. (b) Paid cash to a creditor. ________________________________________________________ Cash, increase; Accounts Receivable, decrease. (c) Received cash from a customer. ________________________________________________ Cash, increase; Bank Loan, increase. (d) Borrowed cash from a bank. ___________________________________________________ Equipment, increase; Accounts Payable, increase. (e) Bought a fax machine on credit. Office ________________________________________________ Cash, increase; Owner’s Equity, (f) The owner invested an additional $1000 in the business. _____________________________ increase. __________________________________________________________________________ Delivery (g) Bought a delivery van worth $19 000; made a down payment of $3000 cash. _____________ Equipment, increase; Cash, decrease; Accounts Payable, increase. __________________________________________________________________________ Office Equipment, decrease; Cash, increase. (h) Sold a used typewriter for cash. _________________________________________________ Cash, decrease; Owner’s Equity, decrease. (i) The owner withdrew cash for personal use. ________________________________________ __________________________________________________________________________ The left side total should equal the K, C, A 3. How can the accuracy of a transaction sheet be checked? ________________________________ right side total: A = L + OE. _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ Copyright © 2002 Pearson Education Canada Inc., Toronto, Ontario 3 Chapter 1/Unit 2 Review Sheet 2/Business Transactions (cont.) 4. Explain the following terms and concepts: K, C An event occurring during the operation of a business which results in a transaction: ____________________________________________________________________ financial change. It always includes an exchange of things of value. _____________________________________________________________________________ _____________________________________________________________________________ Each business is considered a separate unit. Business and business entity concept: __________________________________________________________ personal financial data must be kept separate for accounting purposes. _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ To provide information for decision making. the purpose of accounting: ________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ K, A, T 5. (a) Record these balances on a transaction analysis sheet for Harbour Electronics on November 1, 20--, using the form at the end of this review sheet. Cash $2500; Accounts Receivable $6500; Building $140 000; Equipment $4000; Accounts Payable $9000; K. Bullock, Capital $144 000. (b) Record the following transactions on the same transaction sheet. Nov. 2 2 3 5 Received $5000 cash from customers. K. Bullock invested an additional $10 000 in the business. Bought $5000 worth of equipment for cash. Paid $6000 cash to creditors. (c) Prepare the information for the balance sheet equation on November 5 and enter it below the transaction analysis sheet. (d) Prepare a balance sheet for Harbour Electronics on November 5 using the form at the end of this review sheet. 4 Copyright © 2002 Pearson Education Canada Inc., Toronto, Ontario Chapter 1/Unit 2 Review Sheet 2/Business Transactions (cont.) 5. (a), (b), and (c) Total of left side (Assets) 157 000 $______________________ Total of right side (Liabilities + Owner’s Equity) 157 000 $______________________ 5. (d) Copyright © 2002 Pearson Education Canada Inc., Toronto, Ontario 5