Accounting 200 Julie Stovall
Southeastern Louisiana University Exam
1 (Ch. 1-3) fully solved
Sole Proprietorship - correct answer ✔✔simple to establish, owner controlled, tax advantage
Partnership - correct answer ✔✔simple to establish, shared control, broader skills and
resources, tax advantage
Corporation - correct answer ✔✔easier to transfer ownership, easier to raise funds, no personal
liability
Basic Accounting Equation - correct answer ✔✔Assets = Liabilities + Shareholder Equity
Revenue - correct answer ✔✔Look for the word "revenue" EXCEPT unearned revenue which is a
liability. If you see the word "sales" or "net sales" this is also revenue. (service revenue, sales
revenue, interest revenue, sales, net sales, etc.)
Expense - correct answer ✔✔Look for the word "expense". Also "cost of goods sold..." this is
the only item in this course you will deal with that is an expense but does not have the word
expense attached to it. (rent expense, salaries expense, supplies expense, cost of goods sold,
interest expense....)
Asset - correct answer ✔✔Resources owned by a company. (cash, accounts receivable, supplies,
inventory, equipment, prepaid insurance, prepaid rent, buildings, land, patents, copyrights...)
Liability - correct answer ✔✔Look for the word "payable". Also, unearned revenue is a liability.
This is because it is "unearned". Unearned revenue comes about when a company receives cash
, before providing a service. We owe our customers in terms of service. (interest payable,
accounts payable, notes payable, unearned service revenue, salaries payable.......)
Stockholders' Equity - correct answer ✔✔contains common stock and retained earnings.
Common stock represents the amount invested by stockholders.
Retained earnings is net income retained in the business for future use. It is affected by
Revenues, Expenses and Dividends. Revenues will increase Retained Earnings; whereas,
expenses and dividends will decrease it
Accounts receivable - correct answer ✔✔Right to money from a customer as the result of a sale.
Net Income - correct answer ✔✔when expenses exceed revenues
Income Statement - correct answer ✔✔Revenue - Expenses = Net Income or Net Loss (reports
revenues and expenses for a specific date)
Retained Earnings Statement - correct answer ✔✔Retained earnings beginning balance + net
income, - dividends = your retained earnings ending balance. Net income retained in business
for future use (Statement shows amounts and causes of changes in retained earnings during the
period)
Balance Sheet - correct answer ✔✔Assets = Liabilities + Stockholders' Equity (reports assets and
claims to assets at a specific point in time)
Statement of cash flows - correct answer ✔✔Provides answers to: Where did cash come from
during the period? How was cash used during the period? What was the change in the cash
balance during the period?
1. Income Statement
Southeastern Louisiana University Exam
1 (Ch. 1-3) fully solved
Sole Proprietorship - correct answer ✔✔simple to establish, owner controlled, tax advantage
Partnership - correct answer ✔✔simple to establish, shared control, broader skills and
resources, tax advantage
Corporation - correct answer ✔✔easier to transfer ownership, easier to raise funds, no personal
liability
Basic Accounting Equation - correct answer ✔✔Assets = Liabilities + Shareholder Equity
Revenue - correct answer ✔✔Look for the word "revenue" EXCEPT unearned revenue which is a
liability. If you see the word "sales" or "net sales" this is also revenue. (service revenue, sales
revenue, interest revenue, sales, net sales, etc.)
Expense - correct answer ✔✔Look for the word "expense". Also "cost of goods sold..." this is
the only item in this course you will deal with that is an expense but does not have the word
expense attached to it. (rent expense, salaries expense, supplies expense, cost of goods sold,
interest expense....)
Asset - correct answer ✔✔Resources owned by a company. (cash, accounts receivable, supplies,
inventory, equipment, prepaid insurance, prepaid rent, buildings, land, patents, copyrights...)
Liability - correct answer ✔✔Look for the word "payable". Also, unearned revenue is a liability.
This is because it is "unearned". Unearned revenue comes about when a company receives cash
, before providing a service. We owe our customers in terms of service. (interest payable,
accounts payable, notes payable, unearned service revenue, salaries payable.......)
Stockholders' Equity - correct answer ✔✔contains common stock and retained earnings.
Common stock represents the amount invested by stockholders.
Retained earnings is net income retained in the business for future use. It is affected by
Revenues, Expenses and Dividends. Revenues will increase Retained Earnings; whereas,
expenses and dividends will decrease it
Accounts receivable - correct answer ✔✔Right to money from a customer as the result of a sale.
Net Income - correct answer ✔✔when expenses exceed revenues
Income Statement - correct answer ✔✔Revenue - Expenses = Net Income or Net Loss (reports
revenues and expenses for a specific date)
Retained Earnings Statement - correct answer ✔✔Retained earnings beginning balance + net
income, - dividends = your retained earnings ending balance. Net income retained in business
for future use (Statement shows amounts and causes of changes in retained earnings during the
period)
Balance Sheet - correct answer ✔✔Assets = Liabilities + Stockholders' Equity (reports assets and
claims to assets at a specific point in time)
Statement of cash flows - correct answer ✔✔Provides answers to: Where did cash come from
during the period? How was cash used during the period? What was the change in the cash
balance during the period?
1. Income Statement
