WSP Accounting Crash Course (The Balance
Sheet) Exam questions with correct answers
Balance |Sheet |def |- |VERIFIED |ANSWER✔✔-reports |the |company's |resources |(assets) |and |how |those |
resources |were |funded |(liabilities |and |shareholders |equity) |on |a |particular |date |(end |of |the |quarter, |
end |of |the |year)
fundamental |equation: |A |= |L |+ |E
Assets |- |VERIFIED |ANSWER✔✔-represent |the |company's |resources
requirements: |company |must |own |the |resource
The |resource |must |be |of |value
The |resource |must |have |a |quantifiable |measurable |cost
Going |down |in |order |of |liquidity
-Cash= |most |basic |asset
-Marketable |securities |(also |known |as |investments) |= |like |cash, |less |liquid
-A/R |= |money |that |is |coming |in |to |the |company
-Inventories |includes |the |direct |coats |associated |with |production |of |goods
-Prepaid |expenses |is |a |bit |less |intuitive |and |more |tricky
-PP&E |is |straightforward
-Intangibles |& |Goodwill: |things |acquired |at |some |point |by |the |company |in |the |past |and |now |have |
value |based |on |the |company's |rights |on |the |thing
Assets, |liabilities, |equity |relationship |- |VERIFIED |ANSWER✔✔-A |= |L |+ |E
, Assets |are |a |use |of |funds, |L+E |are |sources |of |funds |(how |it |pays |for |assets)
Liabilities |- |VERIFIED |ANSWER✔✔-represent |what |the |company |owes |to |others |(source |of |funds)
They |must |be |measurable
Their |occurrence |is |probable
current |liab: |due |within |1 |yr
LT |liab: |due |>1 |yr
common |liabilities:
- |A/P: |a |company's |obligations |to |suppliers |for |services |and |products |already |purchased |from |them, |
but |which |have |not |been |paid |(unpaid |bills |to |suppliers)
-Accrued |expenses: |expenses |like |employee |comp |that |the |company |has |incurred, |but |for |which |has |
not |yet |paid |(ie |employee |bonuses)
-ST |+ |LT |debt |(due |within |12 |mo; |not |due |within |12 |mo)
Equity |represents |sources |of |funds |through... |- |VERIFIED |ANSWER✔✔-- |Equity |investment
- |Retained |earnings |(what |the |company |has |earned |through |operations |since |its |inception)
Basically |from |the |company's |profitability,
Equity |grows |through |equity |capital |but |also |by |increased |profitability
Common |equity |categories |- |VERIFIED |ANSWER✔✔--Preferred |stock: |stock |that |has |special |rights |and |
takes |priority |over |common |stock
-Common |stock: |represents |capital |received |by |a |company |when |it |issues |shares
-Treasury |stock: |common |stock |that |has |been |issued |then |reacquired |(brought |back) |by |a |company |
(basically |a |reduction |of |equity |as |company |uses |resources |to |purchase |shares; |it |is |a |contra |account)
-Retained |earnings: |total |company |earnings |/ |losses |since |its |inception, |less |all |dividends
Sheet) Exam questions with correct answers
Balance |Sheet |def |- |VERIFIED |ANSWER✔✔-reports |the |company's |resources |(assets) |and |how |those |
resources |were |funded |(liabilities |and |shareholders |equity) |on |a |particular |date |(end |of |the |quarter, |
end |of |the |year)
fundamental |equation: |A |= |L |+ |E
Assets |- |VERIFIED |ANSWER✔✔-represent |the |company's |resources
requirements: |company |must |own |the |resource
The |resource |must |be |of |value
The |resource |must |have |a |quantifiable |measurable |cost
Going |down |in |order |of |liquidity
-Cash= |most |basic |asset
-Marketable |securities |(also |known |as |investments) |= |like |cash, |less |liquid
-A/R |= |money |that |is |coming |in |to |the |company
-Inventories |includes |the |direct |coats |associated |with |production |of |goods
-Prepaid |expenses |is |a |bit |less |intuitive |and |more |tricky
-PP&E |is |straightforward
-Intangibles |& |Goodwill: |things |acquired |at |some |point |by |the |company |in |the |past |and |now |have |
value |based |on |the |company's |rights |on |the |thing
Assets, |liabilities, |equity |relationship |- |VERIFIED |ANSWER✔✔-A |= |L |+ |E
, Assets |are |a |use |of |funds, |L+E |are |sources |of |funds |(how |it |pays |for |assets)
Liabilities |- |VERIFIED |ANSWER✔✔-represent |what |the |company |owes |to |others |(source |of |funds)
They |must |be |measurable
Their |occurrence |is |probable
current |liab: |due |within |1 |yr
LT |liab: |due |>1 |yr
common |liabilities:
- |A/P: |a |company's |obligations |to |suppliers |for |services |and |products |already |purchased |from |them, |
but |which |have |not |been |paid |(unpaid |bills |to |suppliers)
-Accrued |expenses: |expenses |like |employee |comp |that |the |company |has |incurred, |but |for |which |has |
not |yet |paid |(ie |employee |bonuses)
-ST |+ |LT |debt |(due |within |12 |mo; |not |due |within |12 |mo)
Equity |represents |sources |of |funds |through... |- |VERIFIED |ANSWER✔✔-- |Equity |investment
- |Retained |earnings |(what |the |company |has |earned |through |operations |since |its |inception)
Basically |from |the |company's |profitability,
Equity |grows |through |equity |capital |but |also |by |increased |profitability
Common |equity |categories |- |VERIFIED |ANSWER✔✔--Preferred |stock: |stock |that |has |special |rights |and |
takes |priority |over |common |stock
-Common |stock: |represents |capital |received |by |a |company |when |it |issues |shares
-Treasury |stock: |common |stock |that |has |been |issued |then |reacquired |(brought |back) |by |a |company |
(basically |a |reduction |of |equity |as |company |uses |resources |to |purchase |shares; |it |is |a |contra |account)
-Retained |earnings: |total |company |earnings |/ |losses |since |its |inception, |less |all |dividends
