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Book by Hongren Harrison

Sandy Yulieth Ramos Molina

April 24, 2020

Pilot University of Colombia

Public Accounting
Introduction to Accounting
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E1-14 (Learning objectives 1, 5, 6) Use

of the accounting vocabulary [10 to 15 min]
Relate the following accounting terms
with its correct definition:

TERMS: DEFINICIONES:
Accounting equation A. Economic resource that is expected to
produce benefits in the future
2. Actvo
B. Economic obligation (a debt) by
3. Balance sheet
pay an individual or an organization
4. Expense external to the company

5. Income statement C. Excess of total expenses over income

totals
6. Passive
D. Excess of total income over expenses
Net utility
totals
8. Net loss
E. Basic tool of accounting, that
9. Income It is expressed as Assets = Liabilities + Capital
accountant
10. Statement of cash flows
F. Decrease in equity that
11. Status of equity it occurs due to the use of assets or the increase
from the owner of liabilities, in the course of the delivery of
goods or services to customers

G. Quantities earned by the delivery of

goods or services to customers

H. Report on cash inflows and outflows

during a period
I. Report of the assets, the liabilities and the
equity of an entity on a date
specify

J. Report of income, expenses, and net profit

or net loss of an entity for a
period

K. Report showing the changes in the

capital in a period
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E1-16 (Learning objectives 5, 6, 7) Characteristics of a business of your own,

accounting concepts and use of the accounting equation [5 to 10 min] Select the
Information for three own businesses, as follows:
It is required

1. Calculate the amount missing in the accounting equation of each entity.

COMPANY ACTIVE PASSIVE CAPITAL

Nice cuts $ 68,000 $ $25,000 43.000
LOVE DRY CLEANERS $ 85,000 $ 31,000 $ 54,000
HUDSON GIFT AND CARDS $ 102.000 $ 49.000 $ 53.000

2.Listar en orden alfabético las cinco características principales de un negocio propio.

Firm bases
Visionary capabilities
It has added value, meaning it offers something that the competition does not have.
It satisfies the needs of the consumer
It has to be viable both in the short and long term.

3. What accounting concept indicates to us that the three previous companies will cease to exist, if
the owners die

In the concept of entity, it states that an accounting entity is an organization that

remains apart as an independent economic entity, as these companies are a
own business is limited either by the decisions made by the owner or by the
death of the same, whatever happens first.

E1-18 (Learning Objectives 7, 8) Use of the accounting equation for analysis

transactions [5 to 10 min] As the manager of the restaurant Aunty Pasta, you
must deal with a variety of business transactions:

Required

1. Give an example of a transaction that has each of the following effects

about the accounting equation:
a) Increase of one asset and decrease of another asset.
Cash purchase of goods
b) Decrease of an asset and decrease of the owner's equity.
Withdrawal of a member with cash payment
c) Decrease of an asset and decrease of a liability.
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Payment of a supplier account

d) Increase in an asset and increase in the owner's equity.
A partner joins the company with cash.
e) Increase of an asset and increase of a liability
Purchase of goods on credit

E1-19 (Learning Objectives 7, 8) Use of the accounting equation to analyze the

transactions [10 to 20 min]

Required:
1. Indicate the effects of the following business transactions on the equation
accountant of the Flickster Video store. The transaction (a) was resolved as a guideline.

a) Cash of $10,000 is received and the owner received capital.

Response: Increase in assets (Cash)
Increase in the owner's equity (Capital)
b) Obtención de ingresos a crédito por rentas de videos, $1,200.
Response: Increase of Assets (Accounts Receivable)
Increase in Owner's Equity (Capital)
c) Purchase of office furniture on credit, $600.
Response: Increase of Assets (Furniture and Equipment)
Increase in Liabilities (Accounts Payable)
d) Receipt of cash from a credit account, $300.
Response: Increase in assets (cash)
decrease in assets (accounts receivable)
e) Cash payment on a credit account, $200.
Response: decrease in assets (cash)
Increase in liabilities (accounts payable)
Sale of land for $12,000, which was the cost of it.
Response: Decrease in income (sale of land)
Increases in assets (cash)
g) Rental of videos and cash receipt of $600.
Response: Decrease in costs and expenses (rent)
Increases in assets (cash)
h) Payment of the monthly office rent, $800.
Response: Increase in costs and expenses (rent)
Decrease in assets (cash)
i) Payment of $100 in cash to purchase supplies that will be used in the future.
Response: Decrease in assets (cash)
Increases in costs (supplies)
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E1-20 (Learning Objectives 7, 8) Use of the accounting equation for analysis

transactions [10 to 20 min]
Cindy Surrette opened a medical practice center. During July, the first month of
operations, the business, designated as Cindy Surrette, M.D., experienced the
following events:

On July 6, Surrette invested $53,000 in the company by opening an account.

bank account in the name of Cindy Surrette, M.D. The business provided capital
Paid $35,000 in cash for the land.
Purchased medical supplies on credit for $1,900
Opened the business officially
During the rest of the month, Surrette treated some patients and obtained income.
for services of $7,000, receiving cash
Paid expenses in cash: employee salaries, $2,190; office rent,
$1,000
Returned some supplies purchased on the 12th for their cost.
$600
Paid $1,500 on a credit account

Required
1. Analyze the effects of these events on the accounting equation of the clinic.
medical practices Cindy Surrette, M.D. Use a format similar to that of figure 1-8,
Cash
Cindy Surette, Capital.
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ASSETS PASSIVE HERITAGE

CINDY SURRETTE INCOME

BANK BOX GROUND SUPPLIES SUPPLIERS
CAPITAL EXPENSES
$53,000 $53,000
2. $35,000 $35,000
BALANCES $18,000 $35,000 $53,000
3. $ 1,900 $1,900
BALANCES $18,000 $ 1.900 $35,000 $1,900 53,000
4.
BALANCES $18,000 $ 1.900 $35,000 $1.900 $53,000
5. $ 7,000 $7,000
Balances $18,000 $ 7,000 $ 1.900 $35,000 $1,900 $60,000 7,000
6. $2,190 $2.190
6. $ 1,000 $1.000
6. $300 $300
BALANCES $18,000 $3.510 $1,900 $35,000 $1,900 $56.510 $3.510
7. $600 $600
BALANCES $18,000 $3.510 $ 1,300 $35,000 $1,300 $56,510 $3.510
8. $ 1.300 $1,300
Balances $18,000 $ 2.210 $ 1.300 $35,000 $0 $56.510 $3.510

56.510 $56.510

E1-21 (Learning objectives 7, 8, 9) Use of the accounting equation for analysis

transactions and the calculation of net profit or net loss [10 to 15 min] A
The analysis of the first eight transactions of Printman is presented below.
Copy & Print Service. The owner made just one investment and did not make any withdrawals.

CASH + ACCOUNTS + TEAM = ACCOUNTS + JOE

To be collected TO PAY PRITMAN, CA
PITAL
+23.000 +23.000
2. +3.400 +3.400
3. +12.700 +12.700
+150 -150
5. -500 +500
-7.600 -7.600
7. +900 +900
8. -2.100 -2.100

It is required

1. Describe each transaction.

a) Open a bank account in which you deposit $23,000 in cash as

contribution to the business

b) The company financed a copying and printing service for a client for
$3,400 on credit
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I purchase new equipment on credit for $12,700.

He received $150 in cash on account of the service financed to his client
e) I bought office equipment for $500, which I paid through bank transfer.
f) Pay $7,600 of the debt for purchasing the new equipment through
transfer
g) Provides copying service to a client for $900 paid in cash
h) Pay overhead expenses of $2,100 by transfer

2. If these transactions fully describe the operations of Printman Copy & Print
Service during the month, what was the amount of net profit or net loss?

PRINTMAN COPY & PRINT SERVICE

INCOME STATEMENT

DEBT CREDIT
REVENUES
Accounts receivable $ 3.400
COPYING SERVICE $ 900
TOTAL INCOME $ 4.300
EXPENSES
GENERAL EXPENSES $ 2.100
TOTAL EXPENSES $ 2.100
NET PROFIT $ 2.200

The net profit was $2,200

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