PACE Exam question with answers
Accounting Equation - -Assets = Liabilties + Stockholders Equity
-Gross Profit Margin/Profit - -Sales revenue - cost of goods sold
-Net Income - -Gross Margin - Expenses
-Retained Earnings - -BegRE + NI - Dividends
-Activities on the Statement of Cash Flows - -Operating
Investing
Financing
-Operating Activities - -Normal day to day activities
Change in current assets and liabilities
-Investing Activites - -Changes in long term assets
Use for more than a year
-Financing Activites - -Changes in long term debt
Changes in SE except for net income
-DEAD Rule - -Debit all Expenses, Assets and Dividends
-The heading of Finacincal Statements - -Name of Company
Name of Statement
The Date
-If assets are 1.5 times liabilities and the stockholders equity is 1500 what is the
value of assets - -4500
-Accounts that may require adjustments - -prepaid rent
A/R
Supplies
Deprication
Intrest Expense
Wages Expense
Unearned Revenue
-Another word for adjusting entries - -True Up
-Difference between adjusting and closing entries - -Only close revenues, expenses,
and dividends
This updates retained earnings
-Book error: We debited cash for 200 and the correct debit was 2000 - -An addition
to the book balance
, -Outstanding checks - -A subtraction from the bank balance
you wrote the check but the bank has yet to take it out of your account.
-The bank charged our account, erroneously for a check written by another bank
customer - -An addiction to the bank balance
-Service charge - -A subtaction from the book balance
-Deposits in transit - -An addiction to the bank balance
Deposit into the bank
-NSF Check - -Subtraction from the book balance
its a bounce check the bank knows but you have to tske the money of your account
-Bank collection of a note receiveable on our behalf - -An addition to the book
balance
-Matching Principle - -we recognize this possibilty expense when the revenue is
recognized
-Two methods of reconizing uncollectiable expenses - -Income statement approach
(percentage of sales)
Balance Sheet Approach (based on the accounts receivable)
-Balance sheet Approach - -Has a new ending balance
-Nets Accounts Receivable - -Accounts Receivable - Allowance for BD
-Journal Entry for an uncollectible expenses - -Dr.Uncollectible Expense
Cr. Allowance for BD because it is a conta asset
-Journal Entry for net sales - -Dr. Accounts rec.
Cr. Sales revenues
-Journal Entry for a write off uncollectibles - -Dr. Allowance for BD
Cr. A/R
-Calculation of what would be on the Balance Sheet (% of sales) - -A/R - Allowance
for BD
-Aging method - -use a t-chart
-How would a write off impact the income statement? - -No impact
-How would impact the NET A/R? - -No impact
-How would recovery impact the income statement? - -No Impact
-The cost of goods sold formula - -Beg Inv + Purchases = Cost of goods avaiable -
Ending Inv = COGS
Accounting Equation - -Assets = Liabilties + Stockholders Equity
-Gross Profit Margin/Profit - -Sales revenue - cost of goods sold
-Net Income - -Gross Margin - Expenses
-Retained Earnings - -BegRE + NI - Dividends
-Activities on the Statement of Cash Flows - -Operating
Investing
Financing
-Operating Activities - -Normal day to day activities
Change in current assets and liabilities
-Investing Activites - -Changes in long term assets
Use for more than a year
-Financing Activites - -Changes in long term debt
Changes in SE except for net income
-DEAD Rule - -Debit all Expenses, Assets and Dividends
-The heading of Finacincal Statements - -Name of Company
Name of Statement
The Date
-If assets are 1.5 times liabilities and the stockholders equity is 1500 what is the
value of assets - -4500
-Accounts that may require adjustments - -prepaid rent
A/R
Supplies
Deprication
Intrest Expense
Wages Expense
Unearned Revenue
-Another word for adjusting entries - -True Up
-Difference between adjusting and closing entries - -Only close revenues, expenses,
and dividends
This updates retained earnings
-Book error: We debited cash for 200 and the correct debit was 2000 - -An addition
to the book balance
, -Outstanding checks - -A subtraction from the bank balance
you wrote the check but the bank has yet to take it out of your account.
-The bank charged our account, erroneously for a check written by another bank
customer - -An addiction to the bank balance
-Service charge - -A subtaction from the book balance
-Deposits in transit - -An addiction to the bank balance
Deposit into the bank
-NSF Check - -Subtraction from the book balance
its a bounce check the bank knows but you have to tske the money of your account
-Bank collection of a note receiveable on our behalf - -An addition to the book
balance
-Matching Principle - -we recognize this possibilty expense when the revenue is
recognized
-Two methods of reconizing uncollectiable expenses - -Income statement approach
(percentage of sales)
Balance Sheet Approach (based on the accounts receivable)
-Balance sheet Approach - -Has a new ending balance
-Nets Accounts Receivable - -Accounts Receivable - Allowance for BD
-Journal Entry for an uncollectible expenses - -Dr.Uncollectible Expense
Cr. Allowance for BD because it is a conta asset
-Journal Entry for net sales - -Dr. Accounts rec.
Cr. Sales revenues
-Journal Entry for a write off uncollectibles - -Dr. Allowance for BD
Cr. A/R
-Calculation of what would be on the Balance Sheet (% of sales) - -A/R - Allowance
for BD
-Aging method - -use a t-chart
-How would a write off impact the income statement? - -No impact
-How would impact the NET A/R? - -No impact
-How would recovery impact the income statement? - -No Impact
-The cost of goods sold formula - -Beg Inv + Purchases = Cost of goods avaiable -
Ending Inv = COGS
