BUS FPX 2061 Assessment 2 Template

BUS FPX 2061 Assessment 2 Template

Student Name

Capella University

BUS-FPX2061 Accounting Fundamentals

Prof. Name

Date

Part 1: Accounting Cycle

1. Describe the steps in recording and posting the effects of a business transaction. Provide some examples of source documents used in these steps.

The accounting process begins with identifying all business transactions, such as sales, purchases, and vendor payments. Once identified, these transactions are recorded in a journal or entered into accounting software to maintain accuracy and consistency. The journal entries are then posted to the general ledger, which classifies all transactions by account type. After posting, a trial balance is prepared to evaluate the company’s financial position and to detect any discrepancies between debits and credits. The worksheet is analyzed to ensure that all entries are balanced properly.

Adjusting journal entries are made to correct errors or include accrued items, such as unpaid expenses or unearned revenues. Once adjustments are completed, financial statements—including the Balance Sheet, Income Statement, and Cash Flow Statement—are prepared to reflect the company’s financial health. Finally, the books are closed to conclude the current accounting period and prepare for the next.

Examples of source documents used in these steps include:

2. Which steps in the accounting cycle are performed throughout the accounting cycle?

Steps 1 through 4—which include identifying transactions, recording them, posting to the ledger, and preparing trial balances—are performed continuously throughout the accounting cycle. These steps ensure ongoing accuracy and timely updates to financial records.

3. Which of the steps in the accounting cycle are performed only at the end of the accounting period?

Step 8, which involves closing the books, is completed only at the end of the accounting period. This step finalizes the company’s financial statements and resets temporary accounts for the next cycle.

4. How do ethical considerations impact each stage of the accounting cycle? Provide specific examples.

Ethical considerations influence every stage of the accounting cycle. Accountants must uphold integrity, confidentiality, and transparency while recording and reporting financial data. For example, recording all transactions truthfully ensures that financial statements are accurate and reliable. Maintaining confidentiality protects sensitive company information, while avoiding conflicts of interest preserves professional objectivity. Ethical conduct enhances trust among stakeholders and supports the credibility of financial reporting.

5. What is the purpose of the “dividends” account? Under what circumstances would this account be increased?

The dividends account tracks the distribution of profits to shareholders. This account increases when the company declares or pays dividends, representing a reduction in retained earnings. The increase signifies that the organization is returning a portion of its profits to its investors.

6. What are the rules of debit and credit for accounts appearing on a firm’s balance sheet and income statement?

The rules for debit and credit are fundamental to maintaining the balance of the accounting equation.

These rules ensure that transactions are accurately recorded and balanced within the double-entry accounting system.

7. Describe the nature and purposes of the general journal, ledger, and chart of accounts.

The general journal serves as a chronological record of all business transactions. It provides a detailed description of each transaction before being transferred to the ledger. The general ledger organizes all journal entries by account type, offering a comprehensive view of the company’s financial activities. The chart of accounts functions as an indexed list of all accounts used in the ledger, allowing for systematic categorization and efficient financial reporting.

8. What are the purposes of an unadjusted trial balance? Describe the types of accounts that would appear on this type of trial balance.

The unadjusted trial balance compiles all ledger account balances to ensure that total debits equal total credits before adjustments are made. It helps identify potential posting or recording errors early in the process.

Common account types appearing in an unadjusted trial balance include:

9. If you found that the total of the debit column of the trial balance is $200,000, while the total of the credit column is $180,000, what are some possible causes of this difference?

A difference between debit and credit totals often indicates recording or posting errors. Possible causes include:

References

Horngren, C. T., Harrison, W. T., & Oliver, M. S. (2019). Accounting (12th ed.). Pearson.

Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2022). Financial Accounting (11th ed.). Wiley.

BUS FPX 2061 Assessment 2 Template

American Institute of Certified Public Accountants (AICPA). (2023). Code of Professional Conduct. https://www.aicpa.org