Question

You can choose anything you want.

Please do fast you can.

Please provide an original post AND please reply to at least one classmate's post around one of the topics from this week, explaining a topic to the class, discussing a problem that you found particularly difficult, or expanding on something that you learned. To get full points you should have a thoughtful topic or response. You must complete both parts to get full credit. Please see below for an example of a strong discussion post and reply.

Learning Objectives: CHAPTER 1

1. Explain why accounting is the language of business
2. Explain and apply underlying accounting concepts, assumptions, and principles
3. Apply the accounting equation to business organizations
4. Evaluate business operations through the financial statements
5. Construct financial statements and analyze the relationships among them
6. Evaluate business decisions ethically

Learning Objectives: CHAPTER 2

1. Explain what a transaction is
2. Define “account” and list and differentiate between different types of accounts
3. Show the impact of business transactions on the accounting equation
4. Analyze the impact of business transactions on accounts
5. Record (journalize and post) transactions in the books
6. Construct and use a trial balance

EXAMPLE OF WHAT I'M LOOKING FOR:

One thing I found challenging was the credits and debits concept from chapter two and matching them up, (common stock would be a cash debit and stock credit). Once I got it down it was one of those "why didn't it make sense to me sooner" moments but at the time I didn't understand and would switch things. How I approached the chapter was really to make sure I understood all the terms, ie notes payable, accounts receivable, etc. Being able to understand them without going back to the textbook made the process a bit faster and overall easier. Another thing was really taking advantage of the internet and that if there was something in the textbook I didn't understand, looking it up on Google and going through different websites and tutorials. While going through the problems I made sure to take as thorough notes as I could with information that I knew would help me moving forward, targeting the problems that were difficult for me. Being able to go back and read through something that was written in a way that made the most sense to me as an individual definitely proved helpful. I also Skyped a friend who is currently enrolled in a financial accounting class and we would work through problems together.

Answer 1

As I understand from the question posted is :

You are looking for a Question + Solution which covers the complete discussion of Chapter 1 & 2.

The following answer is with above perspective.

Learning Objectives: CHAPTER 1

1. Explain why accounting is the language of business : People with an interest in the affairs of enterprises include - shareholders and potential shareholders; suppliers and potential suppliers of debt capital ; trade creditors ; customers ; employees ; officials of IT department and other govt. interests. All these people have interest in ensuring the Financial Statement (Balance Sheet, Income Statement, Cash Flow statement) they use, and upon which they rely to present a true and fair picture of the position and progress of the enterprise. Basis this presentation we will understand if the business is earning sufficient profits or incurring losses and it has sufficient money to pay off debts or not. This helps the investors and creditors to make rational decisions concerning investments and credits. This also helps in assesing the amount, timing and uncertainty of prospective cash flow. It also enhance the social welfare by looking into the interest of employees, trade unions, customers and Government.
2. Explain and apply underlying accounting concepts, assumptions, and principles : The basic and widely use accounting CONCEPTS are : a. Accruals concept - Revenues are recognised once earned, and expenses are recognised when assets are consumed, which means that a business recognise sales, profits and losses in amounts that vary from what would be recognised based on the cash received from customers or when cash is paid to suppliers and employees. b. Conservatism concept Revenues are only recognised when there is a reasonable certainty that they will be realised, whereas expenses are recognised sooner, when there is a reasonable possibility that they will be incurred. This concept tends to result in more conservative financial statements. c. Consistency concept Once a business chooses to use a specific accounting method, it should continue using it on a go-forward basis. d. Going concern concept Financial statements are prepared on the assumption that the business will remain in operation in future periods. Under this assumption, revenue and expense recognition may be deferred to a future period, when the company is still operating. Otherwise, all expense recognition in particular would be accelerated into the current period. e. Matching concept The expenses related to revenue should be recognised in the same period in which the revenue was recognised. By doing this, there is no deferral of expense recognition into later reporting periods, so when company's financial statements are viewed, it can be assured that all aspects of a transaction have been recorded at the same time. Widely used accounting ASSUMPTIONS are : a. Accrual assumption Transactions are recorded using the accrual basis of accounting, where the recognition of revenues and expenses arises when earned or used, respectively. If this assumption is not true, a business should instead use the cash basis of accounting to develop financial statements that are based on cash flows. The latter approach will not result in financial statements that can be audited b. Conservatism assumption Revenues and expenses should be recognised when earned, but there is a bias toward earlier recognition of expenses. If this assumption is not true, a business may be issuing overly optimistic financial results.c. Consistency assumption The same method of accounting will be used from period to period, unless it can be replaced by a more relevant method. If this assumption is not true, the financial statements produced over multiple periods are probably not comparable. d. Economic entity assumption The transactions of a business and those of its owners are not intermingled. If this assumption is not true, it is impossible to develop accurate financial statements. This assumption is a particular problem for small, family-owned businesses. e.Going concern assumption. A business will continue to operate for the foreseeable future. If this assumption is not true (such as when bankruptcy appears probable), deferred expenses should be recognised at once. f. Reliability assumption Only those transactions that can be adequately proven should be recorded. If this assumption is not true, a business is probably artificially accelerating the recognition of revenue to bolster its short-term results. g. Time period assumption The financial results reported by a business should cover a uniform and consistent period of time. If this is not the case, financial statements will not be comparable across reporting periods. Widely used accounting PRINCIPLES are : a. Conservatism principle. You should recognise expenses and liabilities as soon as possible, even if there is some uncertainty about them, whereas you should delay the recognition of revenues and assets until you are certain of them. This tends to yield more conservative reporting of profits and losses b. Consistency principle Once you follow an accounting principle or method, you should continue to do so in the future. This gives you more consistent reported results. c. Cost principle You should only record a transaction at its original acquisition cost. This principle is less relevant as the accounting standards are pushing more in the direction of fair value. d. Economic entity principle You should keep separate the transactions of different business entities. This prevents the financial results of multiple entities from becoming entangled. e. Full disclosure principle You should include in the financial statements of an entity all of the information that might affect a reader's understanding of those statements. This has led to the creation of a considerable amount of footnote disclosure that accompanies many financial statements. f. Going concern principle This is the assumption that an entity will remain in business. This assumption allows you to defer the recognition of some expenses to later periods (such as depreciation), when a business will presumably still be in operation.g. Matching principle You should record all expenses related to a revenue-generating transaction at the same time that you recognise the revenue. This is the foundation for the use of accrual accounting. h. Materiality principle You should include all transactions in the financial statements if their omission would otherwise influence the decisions of a person using the financial statements. i. Monetary unit principle You can only record an accounting transaction for something that can be expressed in a currency. Thus, you cannot record the value of your employees, or similar internally-generated intangible assets. j. Revenue recognition principle You should only recognise revenue when you have substantially completed all revenue-generating activities associated with the revenue to be recognised. k.Time period principle You should always record the activities of an entity over a standard time period, such as a month or a year.
3. Apply the accounting equation to business organisations : The most commonly used form of the accounting equation which represents the claims on assets by the debt and equity holders i.e Assets = Shareholders' Equity + Liabilities. Assets (what it owns) Liabilities (what it owes to others) Shareholders' Equity (the difference between assets and liabilities). Eg. Mr. X contributed $100000 to a company in exchange for all of its newly issued shares. This business transaction increases company cash and increases equity by the same amount. (i.e Asset ($100000) = Liability + Equity ($100000)). After the company formation, Mr. X needs to buy some equipment, so he purchases $20,000 of installation equipment from a manufacturer for cash. i.e Asset ($100000 ($20000 Cash + $20000 Equipment) = Liability + Equity ($100000)). After six months, Mr. A. is growing rapidly and needs to find a new place of business so he decides to make the most financial to buy a building. Since Mr. A doesn’t have $500,000 in cash to pay for a building, it must take out a loan. Mr. A purchases a $500,000 building by paying $100,000 in cash and taking out a $400,000 mortgage. This business transaction decreases assets by the $100,000 of cash disbursed, increases assets by the new $500,000 building, and increases liabilities by the new $400,000 mortgage. ($100000 + $400000 Cash = Liability $400000 + Equity $100000)
4. Evaluate business operations through the financial statements : As the statement is inadequate as what exactly you are looking for, I have attached an image with the formulas to evaluate the business operations through Financial Statement.
5. Construct financial statements and analyze the relationships among them : I have put an image of DuPont Analysis which is widely used for making financial statement analysis.
6. Evaluate business decisions ethically : Once you get a clear understanding of different ratios, you will be able to analyse the situations with derived ratios.

Chapter 1 was only resolved due to time constrains.