Accounting 101
The systematic process of recording and reporting the financial position of a person or an
organization. It is often called the language of business.
What is accounting?
A review of accounting records and procedures.
What is an audit?
You are looking at a balance sheet: Total Liabilities are $400,000 and Total Equity is $20,000.
Someone spilled coffee on the Total Assets! What should this number be?
How much is $420,000?
The set of accounting rules used by American accountants to prepare reports.
What are the Generally Accepted Accounting Principles (GAAP)?
A person who maintains and reviews business records.
Who is an accountant?
This financial statement provides a summary of revenue and expenses during the accounting
period. This statement is used to figure gross profit.
What is an income statement?
You are interning in the accounting department of a regional fast-food restaurant. You are
preparing the Income Statement and have been given the Total Revenue of $24,621,900 and the
Cost of Revenue of $14,417,200. What is the Gross Profit?
How much is $10,204,700?
This rule states that assets must always equal the sum of liabilities plus the owner’s equity.
What is the accounting Equation?
Anything of value that is owned or controlled.
What is property?
This financial statement provides the cash inflows and outflows during the accounting period.
These items are then further classified into things such as investing, operating, and financing
activities.
What is a statement of Cash Flows?
Your sister buys guitars online, fixes them up, and sells them online. You are helping her
determine her current assets. Her net receivables are $3,500, cash is $5,200, inventory is
$12,000, and other current assets are $2,000. What are the Total Current Assets?
How much is $22,700?
The amount of money contributed by the owners and any retained earnings or losses.
What is Owner's Equity?
Anything of value such as cash, inventory, prepaid expenses, or accounts receivable.
What are assets?
This financial statement reports assets, liabilities, and owner’s equity during the accounting
period. It can be used to determine the liquidity of a business.
What is a balance sheet?
You have an assignment to look at the Balance Sheet for your favorite corporation. Your partner
printed it off and lost the 2nd sheet with the Total Equity. Part of the assignment is to write out the
accounting equation. You’re not worried since page 1 included the Total Assets and Total
Liabilities. Total Assets are $86,000,000 and Total Liabilities are $12,000,000. What is the Total
Equity?
How much is $74,000,000?
Items of value that are held for more than one year.
What are fixed assets?
The unit of measure for property and financial claims.
What is money?
This document shows the changes made to your company’s share capital, retained earnings, and accumulated reserves. For a sole trader, it shows changes to the owners equity. For a partnership, it shows the changes between both partner’s equity.
What is a Statement of Change in Equity?
A convenience store’s liabilities include Accounts Payable $63,008,000, Other Current Liabilities
$3,920,000, and Long-Term Debt $42,018,000. What are the Total Current Liabilities?
How much is $66,928,000?
A company’s financial obligation to pay for things such as accounts payable, taxes payable, and
debt.
What are liabilities?