DePaul Accounting 101 Midterm || with 100% Correct
Answers.
Assets = correct answers Liabilities + Share-owners' Equity
Assets correct answers econ. resources of a company that benefit future operations. Some assets
like Accounts Receivable are amounts owed to the company. Other assets can be characterized
as deferred expenses.
Liabilities correct answers are obligations to pay cash, transfer assets, or provide services to
other entities. (ANYTHING PAYABLE)
Shareholders' Equity correct answers Owners' investment in the business. Theoretically, it is
what would be left over for the owners after all the liabilities are paid. It is equal to net assets:
Stockholder equity = Assets - liabilities.
It consists of two parts:
1) Contributed Capital or Common stock
2) Retained Earnings are equity that has been generated by the company's income producing
activities and kept for use in the business.
Revenues & Expenses correct answers Increases and Decreases in Retained Earnings (and
Stockholders' Equity) that result from operating the business. They are reported in the Income
Statement ONLY.
Dividends correct answers Distributions of Retained Earnings. Dividends are NOT expenses.
Decided by the Board of Directors.
Balance Sheets correct answers They represent a given point in time. They represent all
transactions since inception.
Income Statements correct answers represent only the results of a particular accounting period.
Recognition correct answers refers to deciding when to record a transaction.
Accounts correct answers are storage units for accounting data. An accounting system has a
separate account for each type of asset, each liability, and each component of stockholders'
equity.
Prepaid Expenses correct answers Assets
Unearned Revenues correct answers Liabilities
Trial Balance correct answers Listing of each account shown as either a debit or a credit. The
debits equal the credits. Trial balances are prepared at the end of each accounting period.
, Rules of Double Entry correct answers Each transaction must be recorded with at least one debit
and one credit
CHAPTER 2 correct answers
Normal Balance correct answers of an account is its usual balance and is the side (debit or credit)
that increases the account.
Normal for ACE- Assets (except accumulated depreciation), Expenses and Dividends correct
answers DEBIT
Normal for Liabilities, shareholders' equity, revenue, and Accumulated Depreciation correct
answers CREDIT
Business Transactions correct answers are economic events that effect the company's financial
position. They usually represent exchanges of value.
Recognition correct answers When does the transaction occur?
Has there been economic performance?
Valuation correct answers How much?
Classification correct answers Which account? Asset or expense? Revenue or liability?
Order of recording transactions: correct answers 1. Source documents are analyzed.
2. Transactions are recorded in Journal Entries.
3. Journal Entries for a period are posted in a General Ledger.
A General ledger can be viewed as a book with a page for each account. Each page lists and
summarizes the activity in that account according to the Journal Entries.
Chapter 3: Measuring Business Income. correct answers
Revenue Recognition correct answers All of the following conditions must be met:
Evidence of an arrangement between the 2 parties,
The goods have been delivered or the services performed,
The price is fixed or determinable
Collection is reasonably assured.
Answers.
Assets = correct answers Liabilities + Share-owners' Equity
Assets correct answers econ. resources of a company that benefit future operations. Some assets
like Accounts Receivable are amounts owed to the company. Other assets can be characterized
as deferred expenses.
Liabilities correct answers are obligations to pay cash, transfer assets, or provide services to
other entities. (ANYTHING PAYABLE)
Shareholders' Equity correct answers Owners' investment in the business. Theoretically, it is
what would be left over for the owners after all the liabilities are paid. It is equal to net assets:
Stockholder equity = Assets - liabilities.
It consists of two parts:
1) Contributed Capital or Common stock
2) Retained Earnings are equity that has been generated by the company's income producing
activities and kept for use in the business.
Revenues & Expenses correct answers Increases and Decreases in Retained Earnings (and
Stockholders' Equity) that result from operating the business. They are reported in the Income
Statement ONLY.
Dividends correct answers Distributions of Retained Earnings. Dividends are NOT expenses.
Decided by the Board of Directors.
Balance Sheets correct answers They represent a given point in time. They represent all
transactions since inception.
Income Statements correct answers represent only the results of a particular accounting period.
Recognition correct answers refers to deciding when to record a transaction.
Accounts correct answers are storage units for accounting data. An accounting system has a
separate account for each type of asset, each liability, and each component of stockholders'
equity.
Prepaid Expenses correct answers Assets
Unearned Revenues correct answers Liabilities
Trial Balance correct answers Listing of each account shown as either a debit or a credit. The
debits equal the credits. Trial balances are prepared at the end of each accounting period.
, Rules of Double Entry correct answers Each transaction must be recorded with at least one debit
and one credit
CHAPTER 2 correct answers
Normal Balance correct answers of an account is its usual balance and is the side (debit or credit)
that increases the account.
Normal for ACE- Assets (except accumulated depreciation), Expenses and Dividends correct
answers DEBIT
Normal for Liabilities, shareholders' equity, revenue, and Accumulated Depreciation correct
answers CREDIT
Business Transactions correct answers are economic events that effect the company's financial
position. They usually represent exchanges of value.
Recognition correct answers When does the transaction occur?
Has there been economic performance?
Valuation correct answers How much?
Classification correct answers Which account? Asset or expense? Revenue or liability?
Order of recording transactions: correct answers 1. Source documents are analyzed.
2. Transactions are recorded in Journal Entries.
3. Journal Entries for a period are posted in a General Ledger.
A General ledger can be viewed as a book with a page for each account. Each page lists and
summarizes the activity in that account according to the Journal Entries.
Chapter 3: Measuring Business Income. correct answers
Revenue Recognition correct answers All of the following conditions must be met:
Evidence of an arrangement between the 2 parties,
The goods have been delivered or the services performed,
The price is fixed or determinable
Collection is reasonably assured.
