Complete a 3-part assessment that requires you to think critically to categorize business transactions, apply knowledge about the accounting equation, and identify accounting conventions for business scenarios. This assessment was designed to enhance your understanding of the foundation of accounting procedures and processes.  Toggle Drawer Questions to Consider To deepen your understanding, you are encouraged to consider the questions below and discuss them with a fellow learner, a work associate, an interested friend, or a member of the business community. What are five terms that you consider to be associated with assets (what a business owns)? Consider each term and why it should be included as an asset in a business organization. Assessment Instructions This assessment includes three parts. Use the Assessment 1 Template, which is an Excel workbook and is linked in the Resources under the Required Resources heading, to complete all three parts. You will find each of the three assessment parts under a separate worksheet in the template. Part 1: Basic Accounting Equation Effects Count everything, or almost everything. Just about every event that happens in a business results in changes to the assets, liabilities, or equities. For this reason, it is critical for the accountant to analyze how every business event affects the basic accounting equation, and how every event must be managed. Part 1 of the assessment is a good test of your critical thinking skills as you apply them to the components of the accounting cycle, in particular the basic accounting equation for the balance sheet. Given below is a list of 15 business transactions. Using Part 1 of the Assessment 1 Template, indicate whether each transaction increased (+), decreased (–), or had no effect (NE) on assets, liabilities, and owner's equity. Purchased supplies on account. Received cash for providing a service. Paid expenses in cash. Received an investment of cash from the owner. Experienced a cash withdrawal by the owner. Received cash from a customer who had previously been billed for services provided. Paid cash to purchase equipment. Paid employee salaries. Paid a creditor from whom the business had previously purchased supplies on account. Sold new shares of stock. Paid cash for monthly rent on the office space. Paid cash for monthly utility bills. Performed services on account. Made a payment on a loan received from the bank. Purchased for cash merchandise that will be later resold for profit. Part 2: Missing Accounting Equation Data The accounting equation requires that it always be kept in balance after a business transaction has been processed. This requires the accountant to have applied knowledge of all parts of the equation and to be able to critically analyze when the equation is not in balance. Part 2 of the assessment provides you an opportunity to apply your accounting equation intelligence quotient. Using your knowled.

1. Complete a 3-part assessment that requires you to think
critically to categorize business transactions, apply knowledge
about the accounting equation, and identify accounting
conventions for business scenarios.
This assessment was designed to enhance your understanding of
the foundation of accounting procedures and processes.
Toggle Drawer
Questions to Consider
To deepen your understanding, you are encouraged to consider
the questions below and discuss them with a fellow learner, a
work associate, an interested friend, or a member of the
business community.
What are five terms that you consider to be associated with
assets (what a business owns)?
Consider each term and why it should be included as an asset in
a business organization.
Assessment Instructions

2. This assessment includes three parts. Use the Assessment 1
Template, which is an Excel workbook and is linked in the
Resources under the Required Resources heading, to complete
all three parts. You will find each of the three assessment parts
under a separate worksheet in the template.
Part 1: Basic Accounting Equation Effects
Count everything, or almost everything. Just about every event
that happens in a business results in changes to the assets,
liabilities, or equities. For this reason, it is critical for the
accountant to analyze how every business event affects the
basic accounting equation, and how every event must be
managed. Part 1 of the assessment is a good test of your critical
thinking skills as you apply them to the components of the
accounting cycle, in particular the basic accounting equation for
the balance sheet.
Given below is a list of 15 business transactions. Using Part 1
of the Assessment 1 Template, indicate whether each
transaction increased (+), decreased (–), or had no effect (NE)
on assets, liabilities, and owner's equity.
Purchased supplies on account.
Received cash for providing a service.
Paid expenses in cash.
Received an investment of cash from the owner.
Experienced a cash withdrawal by the owner.
Received cash from a customer who had previously been billed

3. for services provided.
Paid cash to purchase equipment.
Paid employee salaries.
Paid a creditor from whom the business had previously
purchased supplies on account.
Sold new shares of stock.
Paid cash for monthly rent on the office space.
Paid cash for monthly utility bills.
Performed services on account.
Made a payment on a loan received from the bank.
Purchased for cash merchandise that will be later resold for
profit.
Part 2: Missing Accounting Equation Data
The accounting equation requires that it always be kept in
balance after a business transaction has been processed. This
requires the accountant to have applied knowledge of all parts
of the equation and to be able to critically analyze when the
equation is not in balance. Part 2 of the assessment provides
you an opportunity to apply your accounting equation
intelligence quotient.
Using your knowledge about the accounting equation, answer
the following questions in Part 2 of the Assessment 1 Template.
Be sure to show your calculations.

4. The liabilities of the Smith Company are $120,000 and its
owner's equity is $232,000. What is the amount of the
company's total assets?
The total assets of the Jones Company are $190,000 and its
owner's equity is $91,000. What is the amount of the company's
total liabilities?
The total assets of the Greene Company are $800,000 and its
liabilities are equal to one-half of its total assets. What is the
amount of the company's owner's equity?
Beginning the new year, the Orange Company had total assets
of $800,000 and total liabilities of $300,000. If total assets
increased by $150,000 during the year and total liabilities
decreased by $80,000, what is the owner's equity total at the
end of the year?
Beginning the new year, the Orange Company had total assets
of $800,000 and total liabilities of $300,000. If, during the year,
the Orange Company's total liabilities increased by $100,000
and its owner's equity decreased by $70,000, what is the
company's ending amount of total assets?
Beginning the new year, the Orange Company had total assets
of $800,000 and total liabilities of $300,000. If total assets
decreased by $80,000 and its owner's equity increased by
$120,000 during the year, what is the company's year-end total
liabilities amount.
Part 3: Accounting Conventions and Principles
Accounting conventions represent the principles, assumptions,

5. and rules that guide an accountant as he or she analyzes the
effects of business events on the accounting cycle and applies
them to various cycle procedures. Part 3 of the assessment
requires you to determine which of these conventions apply to a
given business scenario to enhance your understanding of the
foundation of accounting procedures and processes.
Using Part 3 of the Assessment 1 Template, identify the
applicable accounting convention for each of the following
business scenarios. More than one convention may apply to each
scenario. Explain your choices for each scenario.
Before completing the scenarios consider and describe what role
ethics has throughout the accounting process and reporting to
internal and external customers. Throughout your assessments
ensure that you apply ethics to your decision making and
reporting.
Scenario 1: The Acme Company is undergoing a reorganization
to improve its financial structure. As part of this process, the
company is considering lowering its expense calculations to
improve the bottom line net income.
Scenario 2: Regal Enterprises has purchased $45,000 worth new
equipment for use in its manufacturing operations and would
like to write off the cost of this equipment in just a couple of
years, instead of the usual 10 years for this equipment type. The
company's president fears that the economic conditions in its
industry will worsen and cause the company to sell the
equipment sooner than expected.
Scenario 3: Bozrah Industries, a small independent retailer,
wants to change its accounting system from cash-based to
accrual-based, and is concerned about how this change will
affect the recording of sales and expenses.

6. Scenario 4: Randolph, Inc., has experienced major turnover in
its accounting department, and the new head of accounting has
been going through the current records of transactions. A couple
of those transactions appear problematic. The first contains an
error of $10,000 that the previous accountant decided was not
large enough to adjust before the financial statements were
prepared. This error would understate income and make the
company look more profitable than it actually is.
Scenario 5: The Morrison Company receives much of its
revenue from those customers who buy or rent furniture and
appliances on the installment plan. Because the company uses
an accrual-based accounting system, revenue is recognized at
the point of sale, even though cash comes in on a monthly basis
from customers. Lately, the company's accountant is
questioning the use of the accrual basis for recognizing revenue,
because several customers have defaulted on their contracts,
causing problems in the accounting system.
Scenario 6: Charter Communications has recently found itself at
the wrong end of multiple lawsuits for failure to provide
necessary services according to their contractual obligations.
Senior management does not want to disclose the potential
liability of these lawsuits on its financial statements.
Submit the Assessment 1 Template with all three parts
completed.