Transactions
Adjustments
More Adjustments
General Q's
More Q's
100
On 11/06 a company paid for gasoline and washer fluid at the gas station with debit card $160. What is the effect on the accounting equation on 11/06?
A$25,000 decrease in assets via Cash and decrease in stockholders' equity via Expenses.
100
On 06/03 the unadjusted balance of Prepaid Insurance shows $50,000 which represents 10 months of car insurance. What is the adjustment needed on 06/30? & how does it effect the accounting equation? -How would your answer change if only doing annual financial statements on 12/31?
A $5,000 decrease to assets via Prepaid Insurance, and a decrease in stockholder's equity due to Expenses. & increase to Insurance Expense. 
If annual financial statements, the amount would change to 7 months or 35,000.
100
This financial statement shows the company's assets, liabilities, and equity on a certain date.
What is the balance sheet?
100
A set of accounting standards that have substantial authoritative support and which guide accounting professionals.
What is GAAP, the acronym for Generally accepted accounting principles?
200
On 04/20 Provides driving services for Lyft. This week's earnings were $1,300. What is the effect on the accounting equation on 04/20?
A $1,300 increase in assets via Cash and increase in stockholders' equity via Revenue.
200
On 08/25 an apartment complex collected $1,100 from tenants which equated to two months rent [yeah right!] in advance as they have had issues with people skipping town. Now it is 10/31 and they have provided those tenants a place to live totaling $1,100. What is the effect on the accounting equation of the adjustment on 10/31?
An $1,100 decrease to liabilities via Deferred/Unearned Rent Revenue and increase to stockholders equity via Revenue.
200
On 09/01 A company bought a 1979 Volkswagen Bus with $30,000 cash to last 4 years with 0 salvage value. In other words, it will be used up at a rate of $7,500/year. What is the adjustment needed on 12/31? & how does it effect the accounting equation?
A $2,500 decrease in assets via net Equipment [or see below for bonus], and a decrease in stockholders' equity via Expenses? & increase to Depreciation Expense.
Extra bragging rights if you also said a decrease to assets via an increase to Accumulated Depreciation - Equipment as a contra asset...its' getting more negative.
7,500/12=625 * 4months = 2,500
200
This is the basic accounting equation.
What is assets = liabilities + owners equity?
200
The quality of information that indicates the information makes a difference in a decision. Materiality, Predict, Confirm
What is Relevance?
hint: if it helps you. Picture skittering mice, running around frantic. Chill out. only do what is relevant. makes a difference in the decision.
Relevant Mice Predict and Confirm.
300
On 02/01 an investor/owner of the business deposited $100,000 into the business checking account as an additional investment of capital into the company. What is the effect on the accounting equation on 02/01?
A $100,000 increase in assets via Cash and stockholders' equity via Common Stock.
300
On 08/12 A company provides driving services for a party bus and hosts the party for a 90th birthday party. We'll let them enjoy the night and send a bill tomorrow. They pay the bill on 09/20. This contract was for $2,800.What is the effect of the adjustment on the accounting equation on 08/12?
A $2,800 increase in assets via A/R and increase in stockholders' equity via Revenue.
300
On 09/01 a company signed a 6-month note payable in the amount of $6,000. The note requires interest at an annual rate of 10%. What is the adjustment needed on 09/30 for interest? - How would your answer change if you were only doing annual financial statements once a year on 12/31 instead of every month?
A $50 increase in liabilities via Interest Payable, and a decrease in stockholders' equity via Expenses. & increase to Interest Expense.
If annual, the amount would change to be $200 for 4 months.
300
These 3 accounts make up retained earnings.
What are "The RED Accounts"? Revenue, Expenses, and Dividends?
300
Information that accurately depicts what really happened and is complete, neutral, and free from error.
What is Faithful Representation?
hint: if it helps you. Picture cats in bow ties and glasses discussing if the information accurately shows what happened.
Faithful Cats No Bias or Errors.
400
On 02/28 a company pays $25,000 in dividends. What is the effect on the accounting equation on 02/28?
A $25,000 decrease in assets via Cash and decrease to stockholders' equity via Dividends?
400
As of Thursday 10/31, a company owes employees $1,000 for work they did hosting a Halloween party in October. Those wages will be paid the next day, on the first Friday in November 11/01. What is the effect on the accounting equation of the adjustment on 10/31?
A $1,000 increase in liabilities via Salaries Payable, and decrease in stockholders' equity via Expenses. & increase to Salary Expense.
400
On 03/16 a company received cash for a future service to perform as the DJ for a customer's graduation party for a price of $3,000. - Now it is 12/15, we have earned the revenue by providing the music and providing the DJ service. What is the adjustment needed on 12/15? & how does it effect the accounting equation?
A $3,000 decrease to liabilities via Deferred/Unearned Service Revenue and an increase to stockholders equity via Revenue.
400
A financial statement that reports a company's revenues and expenses and resulting net income or net loss for a specific period of time.
What is the Income Statement?
400
The amount of net income not paid out to owners as dividends. In other words, the amount of net income retained/kept in the corporation cumulatively over time.
What is Retained Earnings?
500
On 01/18 a company buys $80,000 of equipment, pays $20,000 cash and signs a 2%, five-year note for the balance. What is the effect on the accounting equation on 01/18?
A $60,000 increase in assets via combo of 20K decrease to Cash, plus an 80K increase to Equipment and an increase to liabilities via 60K note payable.
500
On 11/10 a company receives a $500 bill it owes the auto shop for the current period's auto repairs it received in November. What is the effect on the accounting equation of the adjustment on 11/10?
A $500 increase in liabilities via Accounts Payable and a decrease in stockholders' equity via Expenses. & increase to Repair Expense.
500
On 04/05 a company bills a client, $12,000 for party planning services that were provided on 04/02 when we hosted their company's corporate "get to know everyone, let's go rock climbing" party. What is the adjustment needed on 04/02? & how does it effect the accounting equation?
A $12,000 increase to assets via Accounts Receivable and an increase to stockholders equity via Revenue.
500
The principle that companies recognize expenses in the same period in which they make efforts (consume assets or incur liabilities) to generate revenue.
What is the Expense Recognition/Matching Principle?
500
The accounting basis in which companies record transactions that change the companies’ financial statements in the periods in which the events occur, even if cash was not exchanged.
What is Accrual‐basis accounting?
600
On 07/26 a company bought computer paper and other office supplies for $400 on account. What is the effect on the accounting equation on 07/26?
A $400 increase in assets via Supplies and increase in liabilities via Accounts Payable.
600
On 10/1 a company purchased $1,300 of supplies on credit. On 12/31 they did a physical count and only $400 are left. What adjustment is necessary on 12/31? & what is the effect on the accounting equation?
A $900 decrease in assets via Supplies, and decrease in stockholders' equity via Expenses. & increase to Supplies Expense.
600
On 7/1 a company received 1 year of consulting fees in the amount of $2,400. They will earn these fees ratably throughout the year. What is the adjustment needed on 12/31? & how does it effect the accounting equation?
A $1,200 decrease to liabilities via Deferred/Unearned Consulting Revenue and an increase to stockholders equity via Revenue.
600
The stockholders/owners' claim to assets. After the debts are paid off, whatever is leftover for the owners is called _________ __________.
clues: aka the Net Assets. the Net Worth. A - L = ?
What is stockholder's equity?
- to think about: when you buy stock you are buying a % of the net underlying assets of that business.
600
A measure of liquidity computed as current assets divided by current liabilities.
What is the Current Ratio?