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

What are the major differences between the adjusted and unadjusted trial balances?

Adjusted trial balances are complete as they include the adjusted journal entries unlike the unadjusted. You use adjusted trial balances for financial statements.

100

What are the accounts in the closing process?

Revenues

Expenses

Income Summary

Dividends

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

Average Total Assets = 60,000

Return on Assets = 1.67

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 performs a service for clients who do not pay immediately. The clients promise to pay $7,000 within one month.

Debit Accounts Receivable $7,000

Credit Service Revenue $7,000

300

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

Cash Basis: Record Revenues and Expenses when Cash is paid/received.

Accrual Basis: Record Revenues and Expenses when they are earned/incurred, even if cash has not been paid/received.

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 $5,500 of equipment; paid $3,000 cash and paid $2,500 on account.

Debit Equipment $5,500

Credit Cash $3,000

Credit Accounts Payable $2,5000

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

Leonie used the unadjusted trial balance to prepare her financial statements. Did she properly prepare her financial statements? 

No. She must use the adjusted trial balance. Now some of her account balances may be inaccurate.
500

What do the SEC, FASB, and GAAP stand for? How are they related?

FASB: The Financial Accounting Standards Board 

GAAP: Generally Accepted Accounting Principles 

SEC: The Securities and Exchange Commission 

500

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

Debit Office Rent Expense $1,200.

Debit Salaries Expense $1,900.

Credit Cash $3,100

500

ABC Firm owns equipment worth $8,000. They believe the equipment will remain useful for four years and have no value at the end of its life. Create the adjusting entry to record the depreciation 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 statement does not report “for a period” but is more of a "snapshot" of a company's finances?

(Does not read “Month Ended December 31st, 2020” on the header)

Balance Sheet

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