Accounting Answers

3. Define an Unearned Revenue and discuss why this account is not yet a revenue.

1. Which of the following attributes will classify an item which can be seen as a liability in

the Statement of Financial Position?

a. Expenses paid before the actual utilization

B. Expenses already utilized and paid for.

c. Expenses already utilized but have not yet paid for

D. All expenses cannot be classified as a liability component

B. Statement of Comprehensive Income (10 points)

Directions: Construct and improvise a Statement of Comprehensive Income using the following format and calculated values:

The Mirriam Company has the following SCI balances at the end of the year. Prepare an

SCI which contains the determination of net income and comprehensive income for the period.

Gross Profit = ₱ 2,580,750

Operating Profit = ₱ 1,554,330

Income Tax Expense = 25% of Operating Profit

Comprehensive Income = ₱ 2,000,000

Statement of Financial Position

Directions: Improvise a Statement of Financial Position based from the given accounts below in

ACCOUNT FORM.

The Gelo Corporation has the following balances provided for the year 2020:

TOTAL ASSETS = ₱ 3,500,000

TOTAL LIABILITIES = 2,400,000

TOTAL CURRENT ASSETS = ₱ 2,350,000

TOTAL CURRENT LIABILITIES = ₱ 2,400,000

Accounts Receivable

Notes Payable

Unearned Revenue

Income Tax Payable

Comprehensive Income

Building

Land

Intangible Assets

Noncurrent Receivables

Owner’s Capital

Owner’s Withdrawal

Salaries Payable

Prepaid Expenses

Inventories

Interest Payable

Notes Receivable

Directions: Answer the following questions with the most correct answer whether the selection is in multiple-choice or supply the answer.

7. Suppose Ms. Ellana has to owe you money for selling goods on May 12, 2021 and she

will be going to pay only on November 2, 2021, prove that your accounts receivable is

current in nature.

8. What is the normal balance of Bonds Payable?

9. Differentiate a service, merchandising, and manufacturing entity by providing 2 examples for each type of business.

Directions: Answer the following questions with the most correct answer whether the selection is in multiple-choice or supply the answer.

4. If the normal operating cycle is 8 months to August 30, 2023, and the 12 months after the reporting period will jump to the date of December 31, 2023, when is the threshold of

proving that the asset or liability is current? (Pick between August 30, 2023, and

December 31, 2023, only) Explain your position.

5. Which of the following is the correct formula in finding COGS or COS?

a. The COS for manufacturing entities is zero because of its value in deflation.

b. The COS for merchandising entities is goods available for sale minus the ending amount of inventories.

c. The COS for service entities is service available for sale plus the beginning service inventories.

d. The COS for service entities is equal to the adjusted market selling price.

6. Explain why the three items you have not chosen above are incorrect.

A. Choose the letter that corresponds to the correct answer. (Determine the effect of the following transactions on Cash)

1. An increase in the balance of Prepaid Advertising

a. Positive c. No effect

b. Negative d. Adverse Effect

2. A decrease in taxes payable

a. Positive c. No effect

b. Negative d. Adverse effect

3. Initial investment by the owner

a. Positive c. No effect

b. Negative d. Adverse effect

4. Purchase of office equipment

a. Positive c. No effect

b. Negative d. Adverse effect

Directions: Construct a Statement of Comprehensive Income using the following format and calculated values:

The Mirriam Company has the following SCI balances at the end of the year. Prepare an

SCI which contains the determination of net income and comprehensive income for the period.

Gross Profit = ₱ 2,580,750

Operating Profit = ₱ 1,554,330

Income Tax Expense = 25% of Operating Profit

Comprehensive Income = ₱ 2,000,000

Directions: Make a Statement of Financial Position based from the given accounts below in ACCOUNT FORM.

The Gelo Corporation has the following balances provided for the year 2020:

TOTAL ASSETS = ₱ 3,500,000

TOTAL LIABILITIES = 2,400,000

TOTAL CURRENT ASSETS = ₱ 2,350,000

TOTAL CURRENT LIABILITIES = ₱ 2,400,000

Accounts Receivable

Notes Payable

Unearned Revenue

Income Tax Payable

Comprehensive Income

Building

Land

Intangible Assets

Noncurrent Receivables

Owner’s Capital

Owner’s Withdrawal

Salaries Payable

Prepaid Expenses

Inventories

Interest Payable

Notes Receivable

9. Differentiate a service, merchandising, and manufacturing entity by providing 2 examples for each type of business.