VIII. Answer the following questions

1. Why do business owners and managers need accounting records?

2. What usually determines how a business accounting records are best kept?

3. Who may have equity in a business?

4. Keeping separate records for a business and for personal finances is an application of what accounting concept?

5. What are the two groups of equities?

6. How is the owner’s equity figured?

7. How is the accounting equation stated?

8. Assuming that a business will exist forever is an application of what accounting concept?

9. What is the relationship of the amounts on the left side and on the right side of the accounting equation?

10. What requirement is imposed by the double-entry system in the recording of any business transaction?

11. For each of the following accounts, state whether it is an asset, a liability, or owner’s equity: a) Office Equipment, b) John William’s Capital, c) Accounts Receivable, d) Accounts Payable, e) Cash, f) Notes Payable, g) Land.

12. List the following five items in a logical sequence to illustrate the flow of accounting information through the accounting system:

(1) Information entered in journal

(2) Preparation of a business document

(3) Financial statements prepared from ledger

(4) Occurrence of a business transaction

(5) Debits and credits posted from journal to ledger

13. Compare and contrast a journal and a ledger.

14. Which step in the recording of transactions requires greater understanding of accounting principles: (a) the entering of transactions in the journal, or (b) the posting of entries to ledger accounts?

15. Using dollars and cents to record all financial information is an application of what accounting concept?

16. A transaction’s source document is dated September, 15. The entry is not recorded in a journal until September, 17. Which date is recorded in a journal entry?

17. What purposes are served by a trial balance?

18. List and describe the procedures in the accounting process. Why is each step necessary?