| Course | ACC-6040 Fundamentals of Accounting I |
|---|---|
| Module | Module 2 |
| Paper type | Written Assignment 2: operating decisions and the accounting system, operating activities and the income statement |
| Length | About 771 words, 5 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | Master of Science in Accounting |
| Updated | October 2026 |
Free sample paper for ACC 6040 Module 2
January at the Rink: Analyzing, Recording and Summarizing Garden State Ice Rinks' Operating Transactions
Student Name
Master of Science in Accounting, Thomas Edison State University
ACC-6040: Fundamentals of Accounting I
Mentor Name
Month Day, Year
January at the Rink: Analyzing, Recording and Summarizing Garden State Ice Rinks' Operating Transactions
Introduction
Every transaction affects at least two accounts while keeping assets equal to liabilities plus stockholders' equity. Libby et al. (2017) present a three-step routine: identify the accounts affected and classify them, determine the direction and amount of each effect, and confirm that the equation still balances. Journal entries record the result in debit and credit form.
The January Transactions
Two judgments stand out. The league's $48,000 is cash received for services not yet provided, so it is a liability, unearned revenue, until the rink delivers the ice time month by month. And the January utility bill is a January expense even though it will be paid in February, because the expense recognition principle matches costs to the period in which they help produce revenue.
| Date | Event | Analysis | Journal entry |
|---|---|---|---|
| Jan. 2 | The Morris Youth Hockey League pays $48,000 for ice time from January through April | Cash up; an obligation to provide ice time | Dr Cash 48,000; Cr Unearned Revenue 48,000 |
| Jan. 5 | The rink buys $9,000 of concession supplies on account | Supplies up; payable up | Dr Supplies 9,000; Cr Accounts Payable 9,000 |
| Jan. 10 | Public skating, rentals and lessons bring in $38,000 cash | Cash up; revenue earned | Dr Cash 38,000; Cr Service Revenue 38,000 |
| Jan. 14 | Birthday parties booked and held on credit for local schools, $6,500 | Receivable up; revenue earned | Dr Accounts Receivable 6,500; Cr Service Revenue 6,500 |
| Jan. 18 | Resurfacing machine repaired, $2,800 cash | Cash down; expense, because the repair restores normal operation | Dr Repairs Expense 2,800; Cr Cash 2,800 |
| Jan. 25 | Concession sales of $13,000 cash | Cash up; revenue earned | Dr Cash 13,000; Cr Concession Revenue 13,000 |
| Jan. 31 | January wages paid, $39,000 | Cash down; expense | Dr Wages Expense 39,000; Cr Cash 39,000 |
| Jan. 31 | Utilities bill received, payable in February, $17,000 | Payable up; expense incurred in January | Dr Utilities Expense 17,000; Cr Accounts Payable 17,000 |
Posting and the Trial Balance
After posting the entries to T-accounts, starting from the December 31, 2026 balances, the unadjusted trial balance at January 31 lists every account with its balance. Total debits equal total credits, which shows that each entry was posted with equal debits and credits, though it would not catch an entry posted to the wrong account. Key January balances include cash of $301,200, accounts receivable of $32,500, supplies of $9,000, accounts payable of $26,000 and unearned revenue of $48,000.
A trial balance that balances proves only that debits equal credits. A trial balance stays balanced even when an entry lands in the wrong account or a sale is booked twice, so the later review and adjusting steps are still needed.
| Cash account, January | Debit | Credit |
|---|---|---|
| Balance, January 1 | 244,000 | None |
| League deposit | 48,000 | None |
| Public skating and lessons | 38,000 | None |
| Concession sales | 13,000 | None |
| Repair | None | 2,800 |
| Wages | None | 39,000 |
| Balance, January 31 | 301,200 | None |
The January Income Statement, Before Adjustments
The month shows a small loss before adjustments, but this figure is incomplete. One month of the league's ice time, $12,000, has been earned and is still in unearned revenue; the second rink's prepaid rent for January, $12,750, has been used; depreciation for the month has not been recorded; and concession supplies have been consumed. Those adjustments are the subject of Module 3, and they show why an income statement prepared from transactions alone can mislead.
| Income statement, January 2027, unadjusted | Amount |
|---|---|
| Service revenue: public skating, rentals, lessons and parties | $44,500 |
| Concession revenue | 13,000 |
| Total revenues | 57,500 |
| Wages | 39,000 |
| Utilities | 17,000 |
| Repairs | 2,800 |
| Income before adjustments | ($1,300) |
Why the Recognition Principles Matter
Revenue is recognized when the rink transfers the promised service, not when cash arrives, and expenses are recognized in the period they help generate revenue. Under cash-basis accounting, January would show $48,000 of league revenue and no utility expense, overstating the month's performance. The accrual basis produces a measure of performance that users can compare from month to month. Dechow (1994) found that accrual-based earnings were more closely associated with firm performance, as reflected in stock returns, than cash flows over short measurement intervals, evidence that the accrual adjustments improve the measure.
Party deposits work the same way: until the party is held, the deposit is a service owed to the customer. The Zamboni repair, by contrast, is an expense of January because it keeps the ice usable now rather than extending the machine's life, which would have made it a cost to add to the asset. Revenue is recognized when the rink satisfies its promise to a customer, the core principle of Topic 606 (Financial Accounting Standards Board, 2014).
References
Dechow, P. M. (1994). Accounting earnings and cash flows as measures of firm performance: The role of accounting accruals. Journal of Accounting and Economics, 18(1), 3-42. https://doi.org/10.1016/0165-4101(94)90016-7
Financial Accounting Standards Board. (2014). Revenue from contracts with customers (Topic 606) (Accounting Standards Update No. 2014-09).
Libby, R., Libby, P. A., & Hodge, F. (2017). Financial accounting (9th ed.). McGraw-Hill Education.
Reading the ACC 6040 Module 2 assignment instructions
Operating decisions, the accounting system and the income statement make up Written Assignment 2. Expect to analyze transactions for their effects on the accounting equation, prepare journal entries, post to T-accounts, prepare a trial balance and an income statement, and explain revenue and expense recognition. Some exercises use a company's published statements to identify accounts. Figures on this page are illustrative; they continue the invented rink from Module 1, so its December balances carry forward into January. Some versions ask for the trial balance as well. Expect a list of January events to analyze, journalize and post, a trial balance and an income statement before any adjustments.
How the ACC 6040 Module 2 example is put together
The introduction states the three-step transaction analysis. A table presents eight transactions with the analysis and the journal entry for each, followed by explanations of the two judgments, unearned revenue and an expense incurred before payment. A section describes posting and the trial balance, noting what a trial balance can and cannot detect, with the cash T-account as an example. The unadjusted income statement is presented and then qualified by listing the adjustments still needed, which previews Module 3. The final section explains why accrual recognition improves the measure of performance, with research support. Each transaction is analyzed for its effect on the equation before the journal entry is written, which is how the textbook teaches it and how mistakes are caught early.
Reading the ACC 6040 Module 2 grading rubric
Transaction analysis belongs to the group of five assignments that share 25 percent of the grade. On this assignment, mentors check that each transaction's effect on the equation is analyzed correctly, that journal entries use the right accounts and balance, that postings and the trial balance are accurate and that revenue and expense recognition is applied properly, including unearned revenue and accrued expenses. Explanations of the judgments behind entries earn credit beyond the mechanics. Neat tables and labeled T-accounts make the work easy for the mentor to follow. Correct debits and credits matter, but explaining why a deposit is a liability rather than revenue is what separates strong answers. Mentors also check that each journal entry balances and that accounts are named consistently throughout.
Common ACC 6040 Module 2 mistakes, and how to avoid them
Students often record customer deposits as revenue and unpaid bills as nothing at all. Ask two questions for every transaction: has the company delivered what it promised, and has it used up a resource to earn revenue this period? Classify repairs that restore normal operation as expenses and improvements that extend an asset's life as assets. Check that every entry balances before posting. Equal debit and credit totals say nothing about whether each amount landed in the correct account. A free first sample of your own ACC-6040 Module 2 transaction analysis is available on request.
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ACC 6040 Module 2 questions, answered
Where can I find a free ACC 6040 Module 2 sample paper?
The rink's January transactions are worked above: equation analysis, journal entries, a cash T-account, the trial balance and an unadjusted income statement with the adjustments still needed.
Is a customer deposit revenue?
No. Cash received before the service is provided is unearned revenue, a liability, until the company delivers the service.
What does a trial balance prove?
That total debits equal total credits; it does not show whether amounts were posted to the correct accounts.
When is an expense recognized under accrual accounting?
In the period in which it helps generate revenue, even if cash is paid later.
Is a repair an expense or an asset?
A repair that restores an asset to normal operating condition is an expense; an improvement that extends its life or capacity is capitalized.