ACCT 2101- TEST 1 UGA EXAM QUESTIONS
WITH COMPLETE SOLUTIONS
Assets |- |CORRECT |ANSWER✔✔-something |that |the |entity |owns |that |create |a |future |benefit... |land, |
inventory, |construction, |are |all |examples |of |situations |where |in |the |future |they |are |beneficial. |So |its |
an |asset
Liability |- |CORRECT |ANSWER✔✔-Claims |against |an |entity |from |an |outsider |asking |for |cash |or |assets... |
examples |would |be |deferred |payments, |payables, |discontinued |liability/ |operation
Rewriting |the |equation |- |CORRECT |ANSWER✔✔-A= |L |+ |SE |
For |the |creditors |(peps |you |owe): |
L= |A- |SE |
Owners |of |the |entity: |
SE= |A- |L
Stockholdes |Equity |- |CORRECT |ANSWER✔✔-This |is |what |is |the |owners |claims |on |the |assets... |This |is |
broken |down |further |(see |graphic |in |the |pptx)
What |are |revenues? |- |CORRECT |ANSWER✔✔-Up |in |assets |from |operation |activities
What |are |expenses? |- |CORRECT |ANSWER✔✔-Down |in |assets. |Net |assets |that |were |sacrificed |to |
obtain |revenues
All |Assets, |Liabilities, |and |Stockholder |Equity |is |broken |down |into |current |and |non- |current; |except |
for |SE, |which |is |broken |down |between |contributed |capitol |(an |investment) |and |retained |earnings |- |
CORRECT |ANSWER✔✔-
, The |next |part |is |on |transaction |analysis |- |CORRECT |ANSWER✔✔-
A |transaction |that |says... |"Issue |common |stock |to |owners |for |40,000" |- |CORRECT |ANSWER✔✔-This |is |
an |increase |in |cash, |so |an |asset... |to |make |this |balance |this |also |goes |into |common |which |is |under |SE
A |transaction |that |says... |"Buy |PP&E |for |3,400 |cash |- |CORRECT |ANSWER✔✔-In |this |situation, |you |are |
decreasing |your |cash |but |you're |gaining |an |asset... |so |- |in |cash |and |+ |in |the |PP&E |section, |both |assets
A |transaction |that |says... |"Purchase |inventory |on |credit |for |55,000" |- |CORRECT |ANSWER✔✔-Here, |
there |is |an |increase |in |inventory... |also |there |is |an |increase |in |acct. |payable, |because |its |on |credit, |so |
liability
Pay |vendor |32,000 |of |the |amount |owed |- |CORRECT |ANSWER✔✔-This |says, |"amount |owed." |that |tells
|you |that |it |was |on |credit. |being |that |you |are |paying |it |off, |it |is |deceasing |that |acct. |payable |liability. |
Thus, |this |also |decreases |your |cash
Prepaid |Expanses |- |CORRECT |ANSWER✔✔-An |expense |is |something |that |gotta |pay, |so |this |means |
that |in |some |instances |you |would |prepay |it, |before |you |use |it. |This |is |a |benefit |to |you, |so |its |an |
asset... |(prepaid |rent/ |insurance |are |examples)
Payables |- |CORRECT |ANSWER✔✔-This |is |stuff |you |need |to |pay |in |the |future... |this |is |accounts |
payable... |an |example |of |this |is |a |wholesaler |who |gets |products |and |when |it |sales |it |they |pay |the |
producer... |this |is |like |home |depot
Obligation |(unearned |revenue) |- |CORRECT |ANSWER✔✔-This |is |when |the |entity |requires |a |
prepayment |before |anything |happens... |airliners
Accrued |Liabilities |- |CORRECT |ANSWER✔✔-First, |when |you |accrue |something, |you |build |it |up |
overtime... |examples |of |this |is |wages |payable, |interest |payable, |wages |payable... |this |are |accrued |
because |the |increase |overtime |if |you |don't |pay |them |off...
What |do |you |put |in |your |land |value |section? |- |CORRECT |ANSWER✔✔-the |historical |cost |(what |you |
payed |for |it)... |we |are |moving |to |fair |value |though
WITH COMPLETE SOLUTIONS
Assets |- |CORRECT |ANSWER✔✔-something |that |the |entity |owns |that |create |a |future |benefit... |land, |
inventory, |construction, |are |all |examples |of |situations |where |in |the |future |they |are |beneficial. |So |its |
an |asset
Liability |- |CORRECT |ANSWER✔✔-Claims |against |an |entity |from |an |outsider |asking |for |cash |or |assets... |
examples |would |be |deferred |payments, |payables, |discontinued |liability/ |operation
Rewriting |the |equation |- |CORRECT |ANSWER✔✔-A= |L |+ |SE |
For |the |creditors |(peps |you |owe): |
L= |A- |SE |
Owners |of |the |entity: |
SE= |A- |L
Stockholdes |Equity |- |CORRECT |ANSWER✔✔-This |is |what |is |the |owners |claims |on |the |assets... |This |is |
broken |down |further |(see |graphic |in |the |pptx)
What |are |revenues? |- |CORRECT |ANSWER✔✔-Up |in |assets |from |operation |activities
What |are |expenses? |- |CORRECT |ANSWER✔✔-Down |in |assets. |Net |assets |that |were |sacrificed |to |
obtain |revenues
All |Assets, |Liabilities, |and |Stockholder |Equity |is |broken |down |into |current |and |non- |current; |except |
for |SE, |which |is |broken |down |between |contributed |capitol |(an |investment) |and |retained |earnings |- |
CORRECT |ANSWER✔✔-
, The |next |part |is |on |transaction |analysis |- |CORRECT |ANSWER✔✔-
A |transaction |that |says... |"Issue |common |stock |to |owners |for |40,000" |- |CORRECT |ANSWER✔✔-This |is |
an |increase |in |cash, |so |an |asset... |to |make |this |balance |this |also |goes |into |common |which |is |under |SE
A |transaction |that |says... |"Buy |PP&E |for |3,400 |cash |- |CORRECT |ANSWER✔✔-In |this |situation, |you |are |
decreasing |your |cash |but |you're |gaining |an |asset... |so |- |in |cash |and |+ |in |the |PP&E |section, |both |assets
A |transaction |that |says... |"Purchase |inventory |on |credit |for |55,000" |- |CORRECT |ANSWER✔✔-Here, |
there |is |an |increase |in |inventory... |also |there |is |an |increase |in |acct. |payable, |because |its |on |credit, |so |
liability
Pay |vendor |32,000 |of |the |amount |owed |- |CORRECT |ANSWER✔✔-This |says, |"amount |owed." |that |tells
|you |that |it |was |on |credit. |being |that |you |are |paying |it |off, |it |is |deceasing |that |acct. |payable |liability. |
Thus, |this |also |decreases |your |cash
Prepaid |Expanses |- |CORRECT |ANSWER✔✔-An |expense |is |something |that |gotta |pay, |so |this |means |
that |in |some |instances |you |would |prepay |it, |before |you |use |it. |This |is |a |benefit |to |you, |so |its |an |
asset... |(prepaid |rent/ |insurance |are |examples)
Payables |- |CORRECT |ANSWER✔✔-This |is |stuff |you |need |to |pay |in |the |future... |this |is |accounts |
payable... |an |example |of |this |is |a |wholesaler |who |gets |products |and |when |it |sales |it |they |pay |the |
producer... |this |is |like |home |depot
Obligation |(unearned |revenue) |- |CORRECT |ANSWER✔✔-This |is |when |the |entity |requires |a |
prepayment |before |anything |happens... |airliners
Accrued |Liabilities |- |CORRECT |ANSWER✔✔-First, |when |you |accrue |something, |you |build |it |up |
overtime... |examples |of |this |is |wages |payable, |interest |payable, |wages |payable... |this |are |accrued |
because |the |increase |overtime |if |you |don't |pay |them |off...
What |do |you |put |in |your |land |value |section? |- |CORRECT |ANSWER✔✔-the |historical |cost |(what |you |
payed |for |it)... |we |are |moving |to |fair |value |though
