English Task page 24 and 25

Name: Aditya Prasetyo

NPM: C1C017009
Class: Accounting C 2017

Answers to Practice as You Learn

Answers to Introduction to Financial Statements
Practice Problem 1 What is it?
1. Computers - Asset
2. Amounts that customers owe the company - Asset
3. Land - Asset
4. Owe on account - Liability
5. Accrued expenses - Liability
6. Retained earnings Owners Equity
7. Trademarks - Asset
8. Cost of goods sold - Expense
9. Providing goods to customers - Revenue
10. Salaries to employees - Expense
11. Equipment - Asset
12. Interest payable - Liability
13. Owe the bank - Liability
14,. Investments - Asset
15. Common stock Owners Equity
16. Advertising - Expense
17. Cash - Asset
18. Dividends paid Owners Equity
19. Items held to sell to customers - Asset
20. Providing services to customers - Revenue
21. Prepaid Insurance expense - Asset

Assets 1, 3, 7, 11, 14, 17 are all things that the company has and owns
2, this is accounts receivable which is a future benefit to the company
19, this is inventory the company owns
21, paying something ahead of time gives the company future benefit.
this is not an expense until time passes and the insurance is used up

Liabilities 4, this is accounts payable purchased on account, pay later

12, 13 these are owed
5, accrued means not yet paid, an expense not yet paid is a liability

Revenues 9, 20 Providing goods and services to customers

Expenses 10, 16 - A service was provided that must be paid for
8 the cost of inventory that is provided to the customer, the asset
inventory is used up making it an expense

Owners Equity - 6, profits and losses kept in the business belong to the owners
15, owners put funds into the company
18, The company paid a return of cash back to owners
 1. Identify the revenues
sales 123,000 Provided goods to customers
2. Identify the expenses
Salary expense 22,000 employees worked
Utilities expense 8,000 used utilities for the period
Income tax expense 9,000 government provided services
Cost of goods sold 62,000 inventory used to provide to customers
Formulas:
Prepaid expenses is an asset paid ahead makes it a future benefit it is not
an expense until it is used up or time passes
Accrued expenses is a liability accrued means it has not been paid
3.List the revenues first and then list and subtract expenses
Sales
123,000
- Cost of Goods Sold
(62,000)
= Gross Profit
61,000
- Salary expense
(22,000)
- Utilities expense
(8,000)
Income before tax
31,000
- Income Tax Expense
(9,000)
= Net Income
22,000