ACCT 2101- TEST 1 UGA
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
What is good will? - CORRECT ANSWER-reputation of a company
Closing the books - CORRECT ANSWER-
Spread sheets for large companies can get large very fast... the solution is debits
and credits - CORRECT ANSWER-
Assets increase with what? - CORRECT ANSWER-Debit
Liabilities increase with what? - CORRECT ANSWER-Credit
SE increase with what? - CORRECT ANSWER-Credit
Dividends increase with what? - CORRECT ANSWER-Debit
Revenue increase with what? - CORRECT ANSWER-Credit
Expense increases with what? - CORRECT ANSWER-Debit
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
What is good will? - CORRECT ANSWER-reputation of a company
Closing the books - CORRECT ANSWER-
Spread sheets for large companies can get large very fast... the solution is debits
and credits - CORRECT ANSWER-
Assets increase with what? - CORRECT ANSWER-Debit
Liabilities increase with what? - CORRECT ANSWER-Credit
SE increase with what? - CORRECT ANSWER-Credit
Dividends increase with what? - CORRECT ANSWER-Debit
Revenue increase with what? - CORRECT ANSWER-Credit
Expense increases with what? - CORRECT ANSWER-Debit
