Exam (elaborations)
Survey of Accounting Exam 1 Questions and Answers
- Course
- Accounting
- Institution
- Accounting
Survey of Accounting Exam 1 Questions and Answers
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Survey of Accounting Exam 1 Questionsand Answers
Current Assets - Answer-Used w/n a year. When used it becomes an expense.
E.g. Cash, Accounts Receivable, Supplies, Inventory, Prepaid Insurance
Fixed Assets - Answer-More permanent. Each fixed asset (except for land) has an
Accumulated Depreciation account which is a Contra-asset. Cash flow going into it, is
an Investment.
E.g. Equipment, land, building
Current Liabilities - Answer-Paid w/n a year
E.g. Accounts payable, Wages payable, unearned revenue.
Long-term Liabilities - Answer-Paid over a longer period of time than Current Liabilities.
Think longer than a year. Usually has interest. Cash flow involving LT Liabilities is
Financing.
E.g. Notes Payable, Mortgage
Equity - Answer-Ownership of a company. Cash flow that has to do with Stock or
Dividends is Financing.
E.g. Common/Capital stock, Retained Earnings
Formula for Balance Sheet - Answer-Assets = Liabilities + Owned Equity
Fees Earned - Answer-Revenue Account for Operating a Service Business
Sales Revenue - Answer-Revenue Account for Operating a Merchandise Business
Sales Discounts - Answer-Contra revenue account. Measured by credit terms. (n/30) =
Amount must be paid in full in 30 days. Sometimes there is also discount for early
payment (3/10) = 3% discount if paid in 10 days.
Sales Returns and Allowances - Answer-Contra revenue account. Accounts for
situations where the inventory is returned to the business.
Cost of Merchandise/Goods Sold - Answer-Expense account. Amount of inventory you
lost when it is sold. Subtract this from net sales amount to calculate gross profit.
Insurance Expense - Answer-Expense Account. Created when the Prepaid Insurance
Asset is used up.
Supplies Expense - Answer-Expense Account. Created when the Supplies are used up.
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