CHAPTER 1
INTRO TO ACCOUNTING
CHAPTER 2
DEBITS AND CREDITS
CHAPTER 3
ADJUSTING ENTRIES
CHAPTER 4
CLOSING ENTRIES
FINANCIAL
STATEMENTS
100

Calculate Liabilities:

Assets = $120,000

Stockholder’s Equity = $80,000

Liabilities = $40,000

100

Name 3 accounts that have a Debit normal balance. Name 3 accounts that have a Credit normal balance.

Debit: Cash, Accounts Receivable, Land, etc.

Credit: Accounts Payable, Common Stock, Service Revenue, etc.

100

Why are unadjusted trial balances considered incomplete compared to adjusted trial balances?

Unadjusted trial balances are considered incomplete because they do account for several expense and revenue transactions that must be adjusted for at the end of the period.

100

What accounts are typically found in the closing process?

Revenues, Expenses, Income Summary, Dividends, and Retained Earnings

100

Name 2 accounts that fall under each statement.

Income: Revenues and Expenses

Retained Earnings: RE and Dividends

Balance Sheet: Cash and Common Stock, etc.

Cash Flows: Beg. and End. Cash

200

Calculate Return on Assets

Net Income = $100,000

Beginning Total Assets = $60,000

Ending Total Assets = $90,000

Return on Assets = 1.33

200

Calculate the Debt Ratio

Total Assets = $160,000

Total Liabilities = $70,000

Total Stockholder’s Equity = $90,000

0.44 (Rounded)

200

ABC Firm accrued salaries expense of $1,650 that hasn’t been paid yet.

Debit Salaries and Wages Expense $1,650

Credit Salaries and Wages Payable $1,650

200

What occurs after Closing Entries in the Accounting Cycle?

Post-Closing Trial Balance

200

What is the order of the 4 financial statements?

1. Income Statement

2. Statement of Retained Earnings

3. Balance Sheet

4. Statement of Cash Flows

300

What are the differences between Financial and Managerial Accounting?

Financial accounting provides information for external decision makers while Managerial accounting provides information to internal decision makers.

300

ABC Firm purchased a $50,000 building in exchange for a notes payable.

Debit Building $50,000

Credit Notes Payable $50,000

300

What are the differences between cash basis and accrual basis accounting?

Cash basis only records revenues/expenses when cash is collected/paid.

Accrual basis accounting records revenues/expenses when they are earned/incurred, regardless if cash has actually been collected/paid.

300

Calculate the Current Ratio.

Total Assets = $200,000

Current Assets = $150,000

Total Liabilities = $100,000

Current Liabilities = $70,000

Current Ratio = 2.14

300

How is the Statement of Retained Earnings prepared?

Beginning RE 

+/- Net Income (Loss) 

- Dividends

= Ending RE

400

How are dividends different from expenses?

Dividends are distributions to stockholders. 

Dividends do NOT affect Net Income.

Dividends are only on Statement of Retained Earnings.

400

ABC Firm bought $7,000 of equipment; paid $5,000 cash and paid $2,000 on account.

Debit Equipment $7,000

Credit Cash $5,000

Credit Accounts Payable $2,0000

400

ABC Firm has three months of prepaid office rent worth $4,800. At the end of the month, ABC Firm pays for one month worth of office rent. Create the adjusting entry to record the use of the prepaid rent.

Debit Office Rent Expense $1,600

Credit Prepaid Rent $1,600

400

What is the difference between temporary and permanent accounts? What is their role in the closing process?

Temporary accounts are closed at the end of the period while Permanent accounts remain. Temporary accounts are closed during the closing process into a Permanent account.

400

In what ways can financial statements made from unadjusted trial balances understate/overstate account balances?

Asset/Liability/Equity accounts can be over/understated compared to their actual amount.

500

What do the IASB and IFRS stand for? What is their relationship?

IASB: International Accounting Standards Board 

IFRS:  International Financial Reporting Standards

500

ABC Firm paid cash expenses: utilities, $500; office rent, $1,400; and employee salaries, $2,300.

Debit Utilities Expense $500

Debit Office Rent Expense $1,400.

Debit Salaries Expense $2,300.

Credit Cash $4,200

500

ABC Firm owns computer equipment worth $10,000. They believe the equipment will remain useful for four years and will only be worth $2,000 at the end of its life. Create the adjusting entry to record the depreciation of the equipment at the end of the first year.

Debit Depreciation Expense $2,000

Credit Accumulated Depreciation $2,000

500

In what order do the accounts get closed and how do they get closed?

1. Close Revenues and Expenses to Income Summary

2. Close Income Summary to Retained Earnings

3. Close Dividends to Retained Earnings

500

Which financial statements report “for a period”? 

Ex: Read “Month Ended December 31st, 2020”

Income Sheet

Statement of Retained Earnings

Statement of Cash Flow

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