Accounting 101 Exam CH 1-4 with
100% Correct Answers
Accounting Equation - ANS-Assets= Liabilities + stockholder's equity
Assets - ANS-Resources owned by company
Liabilities - ANS-Rights of the creditors or amounts owed to creditors
Equity - ANS-Rights of the owner
AED - ANS-Assets, Expenses, Dividends = Normal debit balance and increase on the
debit side
LER - ANS-Liabilities, Equity, Revenue = Normal credit balances and increase on the
credit side
Assets examples - ANS-Accounts receivable, Cash, Supplies, Inventory, Prepaids
Liabilities examples - ANS-Accounts payable, Wages Payable, Salaries Payable,
Unearned Revenue, Unearned rent,
Equity Examples - ANS-Retained earnings
Capital/Common stock
Revenue Examples - ANS-Rent Revenue, Sales, Fees earned
Expenses Examples - ANS-Wages Expense, Salaries Expense, Supplies Expense,
Utilities Expense, Misc. Expense
Balance Sheet - ANS-Assets, Liabilities and Equity
Income statement - ANS-Revenue and expenses
Rotten Eggs IS Disgusting.... REally - ANS-Revenue and expenses closed to income
summary,
Income summary and dividends closed to retained earnings
*** Balance sheet accounts are NOT closed
, Accounting Cycle - ANS-Journal> Legder> Trial balance (unadjusted) > journal >
Legder > Trial balance (Adjusted) > Financial statements > Journal > Ledger >Post-
closing trial balance
Omitting adjusting entries - ANS-Omitting expenses- Net income overstated
Omitting revenues- Net income understated
5 Types of Adjusting Entries - ANS-Prepaids
Accrued Expenses
Accrued Revenues
Unearned Fees
Depreciation
Prepaid Adjusting Entry - ANS-Debit: Prepaid expense
Credit: Pre-paid account
ex: Pre-paid insurance expense 500
Pre-paid insurance 500
Depreciation Adjusting Entry - ANS-Debit: Depreciation Expense
Credit: Accumulated Depreciation- ( fixed asset)
Unearned Revenue - ANS-*** turning unearned into earned revenue
Debit: Unearned revenue (decrease liability)
Credit: Revenue (Increase revenue)
Accrued Revenue - ANS-Debit: Accounts Receivable ( Did service, now billing
customers)
Credit: Revenue ( increasing revenue from completing services)
Accrued Expense - ANS-Debit: Expense
Credit: Payable
Post-Closing Trial balance - ANS-doesn't include income statement accounts because
they were closed
Fixed assets - ANS-Land, Buildings, Equipment
Current Assets - ANS-Cash, Accounts Receivable, Supplies,
PPE - ANS-Property, Plant and Equipment
Net Loss - ANS-Income summary DEBIT Balance
Net Income - ANS-Income summary CREDIT Balance
100% Correct Answers
Accounting Equation - ANS-Assets= Liabilities + stockholder's equity
Assets - ANS-Resources owned by company
Liabilities - ANS-Rights of the creditors or amounts owed to creditors
Equity - ANS-Rights of the owner
AED - ANS-Assets, Expenses, Dividends = Normal debit balance and increase on the
debit side
LER - ANS-Liabilities, Equity, Revenue = Normal credit balances and increase on the
credit side
Assets examples - ANS-Accounts receivable, Cash, Supplies, Inventory, Prepaids
Liabilities examples - ANS-Accounts payable, Wages Payable, Salaries Payable,
Unearned Revenue, Unearned rent,
Equity Examples - ANS-Retained earnings
Capital/Common stock
Revenue Examples - ANS-Rent Revenue, Sales, Fees earned
Expenses Examples - ANS-Wages Expense, Salaries Expense, Supplies Expense,
Utilities Expense, Misc. Expense
Balance Sheet - ANS-Assets, Liabilities and Equity
Income statement - ANS-Revenue and expenses
Rotten Eggs IS Disgusting.... REally - ANS-Revenue and expenses closed to income
summary,
Income summary and dividends closed to retained earnings
*** Balance sheet accounts are NOT closed
, Accounting Cycle - ANS-Journal> Legder> Trial balance (unadjusted) > journal >
Legder > Trial balance (Adjusted) > Financial statements > Journal > Ledger >Post-
closing trial balance
Omitting adjusting entries - ANS-Omitting expenses- Net income overstated
Omitting revenues- Net income understated
5 Types of Adjusting Entries - ANS-Prepaids
Accrued Expenses
Accrued Revenues
Unearned Fees
Depreciation
Prepaid Adjusting Entry - ANS-Debit: Prepaid expense
Credit: Pre-paid account
ex: Pre-paid insurance expense 500
Pre-paid insurance 500
Depreciation Adjusting Entry - ANS-Debit: Depreciation Expense
Credit: Accumulated Depreciation- ( fixed asset)
Unearned Revenue - ANS-*** turning unearned into earned revenue
Debit: Unearned revenue (decrease liability)
Credit: Revenue (Increase revenue)
Accrued Revenue - ANS-Debit: Accounts Receivable ( Did service, now billing
customers)
Credit: Revenue ( increasing revenue from completing services)
Accrued Expense - ANS-Debit: Expense
Credit: Payable
Post-Closing Trial balance - ANS-doesn't include income statement accounts because
they were closed
Fixed assets - ANS-Land, Buildings, Equipment
Current Assets - ANS-Cash, Accounts Receivable, Supplies,
PPE - ANS-Property, Plant and Equipment
Net Loss - ANS-Income summary DEBIT Balance
Net Income - ANS-Income summary CREDIT Balance
