| BUS-FPX3061 Assessment 2 Template |
| PART 1: Accounting Cycle |
| Respond to the following eight questions using grammatically correct language. |
| 1. Describe the steps in recording and posting the effects of a business transaction and provide some examples of source documents used in these steps. | 1. Record the business transaction. Source document is used as evidence of business transaction.
2.Recording of journal entry; Journalize the business transaction in general journal.
3. Post General Journal entry to ledger accounts.
Some source document used includes invoices and cash payment receipts. |
| 2. Which steps in the accounting cycle are performed throughout the accounting cycle? | 1. Examine source documents to analyze the transaction.
2. Journalize transactions in the general journal.
3. Post General journal entries to the ledger accounts.
4. Prepare a trial balance. |
| 3. Which of the steps in the accounting cycle are performed only at the end of the accounting period? | 1. Prepare post-closing entries.
2. Journalize and post entries.
3. Prepare post-closing trial balance.
4. Prepare financial statements. |
| 4. What is the purpose of the "dividends" account and under what circumstances would this account be increased? | Dividends accounts shows the portion of profits paid by the company to shareholders. Dividend account indicates profits earned by the company during accounting cycle company's and indicates company’s financial stability. |
| 5. What are the rules of debit and credit for accounts appearing on a firm's balance sheet and income statement? | 1. Debit decrease liabilities while credits increase liabilities
2. Debits decrease stockholders’ equity while credits increase stockholders’ equity
3. Debit increase assets while credits decrease assets
4. Debits increase dividends while credits decrease dividends
5. Debits increase expenses while credits decrease expenses
Debits decrease revenues while credits increase revenues. |
| 6. Describe the nature and purposes of the general journal, ledger, and chart of accounts. | A general journal is the original book of entry. It is the book in which all business transactions are recorded in the form of journal entries. General ledger is the collection of all accounts which have been used in making of business transaction. The general ledger sorts information from the general journal into relevant accounts for preparation of financial statements. A chart of accounts is a comprehensive list of accounts, their balances and the numbers of all accounts. General ledger information is summarized using chart of accounts. The chart of account is prepared in the order of assets, liabilities, equity, revenues and expenses. Balances of various accounts are listed under chart of accounts. |
| 7. What are the purposes of an unadjusted trial balance? Describe the types of accounts that would appear on this type of trial balance. | Unadjusted trial balance verifies totals of the debit account balances and totals of credit balances. Debit balance totals should be equal to Credit balance totals. Asset, Liabilities, equities, expenses and revenues accounts are major accounts displayed on unadjusted trial balance. |
| |
| 8. If you found that the total of the debits column of the trial balance for a company is $200,000, while the total of the credits column is $180,000, what are some possible causes of this difference? | Making an error while posting balances in trial balance can make trial balance not to balance. When calculating the trial balance total is being computed, calculating using wrong amount can result to such unbalanced trial balance. Recording a transaction on the wrong type of account or making or recording a transaction on wrong side of account could result to unbalanced trial balance. |
| |
jess22
BUS-3061MitchellJessica_Assessment2-Attempt1.xlsx
