UESTIONS IN BUSINESS ADMINISTRATION ACCOUNTING Fundamental Ideas. 1. What erroneous uses are made of the word "accounting"? Page 3. 2. In what way is accounting related to the science of economics? Page 4. 3. What is the relation between the accountant and the bookkeeper? Page 4. Page 5. 4. What has caused the evolution of the accounting profession? 5. What subjects does the regular examination for public accountants now include? Page 8. Construction of the Account. 1. What is lacking in a classification of "bought" and "sold"? Page 11. 2. What do the terms "debtor" and "creditor" mean 5. What is a nominal account? Illustrate. 6. Illustrate a real or property account. 7. Give two reasons for keeping personal accounts. Page 15. Page 16. Page 16. 8. On June 1, James Brown bought 144 boxes of strawberries for $8.00. On June 1, he sold 60 boxes at 10 cents per box. On June 2, he sold 80 boxes at 10 cents per box, and 4 boxes spoiled. He had to pay 50 cents for the use of a cart. Show how his cash account would appear at the end of June 2. Pages 17-23. 9. What is meant by the double entry system of book 5. What is the best classification of the day book? Page 30. 6. What is the general ledger? Page 32. 7. What is the cash book? Page 33. 8. When is an account said to be balanced? Page 35. 9. How is a trial balance prepared? Page 36. 10. How is the net worth of a business determined? Page 40. 11. Of what does the balance sheet consist? Page 41. Capital. 1. How should the capital account be kept in the case Page 45. 3. If John Smith has 30 shares in a concern and wishes to transfer 20 shares to R. Jones, how is the exchange of shares recorded? 4. What is treasury stock? Page 49. 5. How does the privilege of allowing some stockholders to furnish property in payment for stock afford a shrewd money-making scheme? Page 51. 6. What gives rise to a good-will account? A surplus account? Pages 52, 53. 7. What is the erroneous idea as to the reason for a con cern's issuing bonds? Page 54. Cash Account. 1. Smith and Brown each contribute to the capital $4,000 in the form of checks. The cashier deposits them in the First National Bank. Give two methods of keeping a record of the transactions. Pages 57, 58. 2. Jones buys of Smith & Brown $500 worth of goods and gives his note in exchange. Show how this will appear on the books of Smith & Brown. Page 60. 3. The bank takes Smith & Brown's note of $500, crediting their account with the amount, but exacting $2.50 discount. How should this discount be accounted for on the books of Smith & Brown? Page 63. 4. If Jones dishonors his note, what course will the bank take? How will this change the accounting? Page 64. 5. If the note had not been discounted but had been dishonored by Jones when directly presented by the firm, what entries would have been made? Page 65. 6. If Smith & Brown secure a renewal of a bill they owe, how is the accounting affected? Page 67. 7. What is the relationship between cash, bank, bills receivable, and bills payable? 8. Give an example of a contingent liability. Goods Accounts. Page 67. Page 68. 1. What is an "inward returns" book? An "outward returns" book? Page 71. 2. Jones & Jones, having goods to the amount of $10,000, sold to J. Jackson $1,500 worth of goods. On unpacking, Jackson found that $250 worth of the goods were damaged, and he returned them. How would these transactions appear on the books of Jones & Jones? Page 72. 3. Smith & Brown receive from Thomas Taylor a consignment of goods worth $100. They sell the goods for $150. After deducting their commission of 10 per cent, and freight charges amounting to $2, a draft for the remainder is remitted to Taylor. How would the accounts appear on the books of Smith & Brown! 4. Illustrate the trading account. 5. What does an inventory show? Plant and Property Accounts. Page 77. Pages 78-82. Page 83. 1. Of what do plant and property accounts consist! Pages 85-87. Illustrate. 2. What uses may be made of the money held in the business to represent the value of destroyed or wasted assets which have depreciated in value? Page 89. 3. What are the objections to the process of writing down assets to correspond with their true value? Page 90. 4. At the end of a year's business a firm finds that there is a deterioration amounting to $250 in its plant and property. To offset such depreciation, U. S. bonds are bought. How will this transaction be shown on the books? 5. What is a depreciation reserve? Pages 91, 92. Page 92. 6. Illustrate a transfer of fixed assets into floating. Page 94. 7. What is the most practical method of accounting for 10. What is the effect of a too cautious depreciation policy? Page 101. 11. How does a bank safeguard capital against possible loss? Page 101. 12. How is appreciation accounted for in the books? Page 102. Manufacturing Accounts. 1. How does the manufacturing accounting differ from the accounting of an ordinary retail business? Pages 106, 122. 2. How is the expense side of manufacturing shown in the books? Page 107. 3. What items would appear on the debit side of the production account of the manufacturing department of a concern? On the credit side? What would the account show? Pages 110, 111. 4. What does the trade value represent? Pages 112, 124. 5. How is the cash which is received by the selling end of a concern treated in the books? Page 114. 6. How does the profit shown by a manufacturing or packing department differ from the profit shown by the selling department? 8. What is the purchases analysis book? 7. When departmental ledgers are kept, what accounts are found in the general ledger? Page 114. Page 116. Page 119. 9. Give a method by which the amount of materials issued may be kept track of. Page 120. 2. Why is it impossible to know the exact cost of units of goods by the departmental system of accounting? 3. 4. What is the object of cost accounting? Describe a cost sheet. 5. Of what use is the cost sheet? Page 123. Page 124. Page 125. Page 126. 6. Explain the use of the individual cost sheet. Page 127. 7. How can the cost accounting be carried on as a part of the general accounting system? Page 128. 8. What is the nature of the contract ledger? Page 131. B-VIII-34 |