ACCT 2101- TEST 1 UGA questions
with correct answers graded A+
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
with correct answers graded A+
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
