【正文】 a.None No revenue earned in September。Chapter 03 Operating Decisions and the Accounting SystemChapter 3Operating Decisions and the Accounting SystemANSWERS TO QUESTIONS1. A typical business operating cycle for a manufacturer would be as follows: inventory is purchased, cash is paid to suppliers, the product is manufactured and sold on credit, and the cash is collected from the customer.2. The time period assumption means that the financial condition and performance of a business can be reported periodically, usually every month, quarter, or year, even though the life of the business is much longer.3. Net Ine = Revenues + Gains Expenses Losses. Each element is defined as follows:Revenues increases in assets or settlements of liabilities from ongoing operations.Gains increases in assets or settlements of liabilities from peripheral transactions.Expenses decreases in assets or increases in liabilities from ongoing operations.Losses decreases in assets or increases in liabilities from peripheral transactions. 4. Both revenues and gains are inflows of net assets. However, revenues occur in the normal course of operations, whereas gains occur from transactions peripheral to the central activities of the pany. An example is selling land at a price above cost (at a gain) for panies not in the business of selling land. Both expenses and losses are outflows of net assets. However, expenses occur in the normal course of operations, whereas losses occur from transactions peripheral to the central activities of the pany. An example is a loss suffered from fire damage. 5. Accrual accounting requires recording revenues when earned and recording expenses when incurred, regardless of the timing of cash receipts or payments. Cash basis accounting is recording revenues when cash is received and expenses when cash is paid. 6. The four criteria that must be met for revenue to be recognized under the accrual basis of accounting are (1) delivery has occurred or services have been rendered, (2) there is persuasive evidence of an arrangement for customer payment, (3) the price is fixed or determinable, and (4) collection is reasonably assured. 7. The expense matching principle requires that expenses be recorded when incurred in earning revenue. For example, the cost of inventory sold during a period is recorded in the same period as the sale, not when the goods are produced and held for sale. 8. Net ine equals revenues minus expenses. Thus revenues increase net ine and expenses decrease net ine. Because net ine increases stockholders’ equity, revenues increase stockholders’ equity and expenses decrease it. 9. Revenues increase stockholders’ equity and expenses decrease stockholders’ equity. To increase stockholders’ equity, an account must be credited。 earnings process is not yet plete.b.Interest revenue $ (= $1,500 x 10% x 1 month/12 months)c.Sales revenue $19,500d.NoneNo transaction has occurred。 equity). Stockholders39。 equity). Stockholders39。 equity). Stockholders39。 equity). Stockholders39。 equity). Together, stockholders39。 earnings process is not yet plete.l.Sales revenue$9,600m.Sales revenue$300E3–4. ActivityExpense Account Affected Amount of Expense Incurred in Januarya.Utilities expense $3,800b.Advertising expense$321(= $963 x 1 month/3 months) incurred in January.The remainder is a prepaid expense (A) that is not incurred until February and March.c.Salaries expense $201,500 incurred in January.The remaining half was incurred in December.d.None Expense will be recorded when the related revenue has been earned.e.NoneExpense will be recorded in the future when the related revenue has been earned.f.Cost of goods sold $47,500(= 500 books x $95 per book cost)g.NoneDecember expense paid in January.h.Commission expense$15,560i.NoneExpense will be recorded as depreciation (used portion of asset’s cost) over the equipment’s useful life.j.Supplies expense $4,700 (= $3,500 + $2,600 $1,400)k.Wages expense $120 (= 8 hours x $15 per hour)l.Insurance expense $400(= $4,800 247。 payment related to June electricity usage.g.Wages Expense $3,500h.Insurance Expense $500 incurred and expensed in July and $1,000 not incurred until future months (recorded as Prepaid Expense (A)).i.Repairs Expense $700j.Utilities Expense $900 M3–5.a.Cash (+A) 15,000Games Revenue (+R, +SE) 15,000b.Cash (+A) 3,000Accounts Receivable (+A) 5,000Sales Revenue (+R, +SE) 8,000c.Cash (+A) 4,000Accounts Receivable (A) 4,000d.Cash (+A) 2,500Unearned Revenue (+L) 2,500M3–6.e.Cost of Goods Sold (+E, SE) 6,800Inventory (A) 6,800f.Accounts Payable (–L) 800Cash (A) 800g.Wages Expense (+E, SE) 3,500Cash (A) 3,500h.Insurance Expense (+E, SE) 500Prepaid Expenses (+A) 1,00Cash (A) 1,500i.Repairs Expense (+E, SE) 700Cash (A) 700j.Utilities Expense (+E, SE) 900Accounts Payable (+L) 900M3–7.Balance SheetIne StatementAssetsLiabilitiesStockholders’ EquityRevenuesExpensesNet Inea.+15,000NE+15,000+15,000NE+15,000b.+8,000NE+8,000+8,000NE+8,000c.+4,000–4,000NENENENENEd.+2,500+2,500NENENENETransaction (c) results in an increase in an asset (cash) and a decrease in an asset (accounts receivable). Therefore, there is no net effect on assets.M3–8.Balance SheetIne StatementAssetsLiabilitiesStockholders’ EquityRevenuesExpensesNet Inee.–6,800NE–6,800NE+6,800–6,800f.–800–800NENENENE