Accounting Exam 1 Study Guide (Chapters 1-2)
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Questions and Answers

The [BLANK] is defined as the financial statement that presents the financial position of the company on a particular date.

  • Balance Sheet (correct)
  • Statement of Stockholders' Equity
  • Income Statement
  • Statement of Cash Flows

    • Which of the following is NOT a major category of accounts?

  • Assets
  • Income Statement (correct)
  • Stockholders' Equity
  • Liabilities

    • How many of the following accounts have a normal debit balance: Supplies, Notes Payable, Common Stock?

  • 3
  • None
  • 1 (correct)
  • 2

    • Based on the accounting equation, which of the following accounts will increase Liabilities?

    <p>Accounts Payable (B)</p> Signup and view all the answers

    If Melanie's Lemonade Stand paid rent for the month of January on 1/5, what account is debited and what account is credited on 1/5? (Select ALL that apply)

    <p>Debit Rent Expense (D), Credit Cash (E)</p> Signup and view all the answers

    On 1/1, Ryann's bicycle shop bought $2,000 of inventory on account. On 2/15, Ryann's paid the amount owed for the inventory ($2,000). What account is debited and what account is credited in the journal entry required on 2/15? (Select ALL that apply)

    <p>Debit Accounts Payable (E), Credit Cash (H)</p> Signup and view all the answers

    Based on the Unadjusted Trial Balance shown below, calculate the total amount of Net Income based on preparing an Income Statement.

    <p>1,000</p> Signup and view all the answers

    Based on the Trial Balance and Additional Info shown below, prepare a Statement of Stockholders' Equity. What is the ending balance in the Retained Earnings account as shown on the Statement of Stockholders' Equity you constructed?

    <p>6,000</p> Signup and view all the answers

    Based on the Trial Balance and Additional Info shown below, prepare a Statement of Stockholders' Equity. What is the total amount of Stockholders' Equity as shown on the Statement of Stockholders' Equity you constructed?

    <p>7,000</p> Signup and view all the answers

    Based on the Trial Balance and Additional Info shown below, prepare a Balance Sheet. What is the amount of Stockholders' Equity shown on the Balance Sheet?

    <p>9,000</p> Signup and view all the answers

    Based on the Trial Balance and Additional Info shown below, prepare a Balance Sheet. What is the amount of Total Liabilities and Stockholders' Equity shown on the Balance Sheet?

    <p>10,000</p> Signup and view all the answers

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    Flashcards

    Accounting Equation

    Equation showing that assets equal liabilities plus stockholders' equity.

    Assets

    Resources owned by a company that have economic value.

    Liabilities

    Amounts owed by the company to creditors.

    Stockholders’ Equity

    Owners’ claims to the assets of the company.

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    Revenues

    The income earned from sales of goods or services.

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    Expenses

    Costs incurred to generate revenues.

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    Income Statement

    Financial statement showing revenues and expenses over a specific period.

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    Statement of Stockholders’ Equity

    Summarizes changes in stockholders' equity over a period.

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    Balance Sheet

    A snapshot of the company’s financial position at a certain date.

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    General Ledger

    A complete record of all transactions affecting a company.

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    Journal

    A chronological listing of all transactions.

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    Posting

    Transferring journal entries to the general ledger.

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    Trial Balance

    A list showing that total debits equal total credits.

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    Account

    Summarizes effects of transactions over time for a specific item.

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    Deferred Revenue

    Cash received before goods/services are delivered.

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    Common Stock

    Money invested by shareholders in the business.

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    Retained Earnings

    Cumulative amount of net income not distributed as dividends.

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    Net Income

    The total revenue minus total expenses.

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    T Accounts

    Visual representation of debits and credits for accounts.

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    Journal Entry

    Records the effects of a specific transaction in accounting.

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    Prepaid Expenses

    Payments for expenses paid in advance.

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    Accounts Payable

    Amounts owed to suppliers for purchases on credit.

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    Notes Payable

    Written promise to pay a certain amount of money to creditors.

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    Inventory

    Goods available for sale to customers.

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    Accounts Receivable

    Amounts customers owe to a company for goods/services sold on credit.

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    Cash

    Liquid assets available for immediate use.

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    Financial Statements

    Reports providing information about financial performance and position.

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    GAAP

    Generally Accepted Accounting Principles; guidelines for accounting practices.

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    Study Notes

    Exam 1 Study Guide (Chapters 1-2)

    • Exam Structure: The exam comprises 40 multiple-choice, multiple-answer, and fill-in-the-blank questions. It focuses on definitions, accounting processes, and financial statement preparation. Refer to pages 5-8 for the format.

    Exam Tips

    • Accounting Equation: Write down the accounting equation on your scrap paper before starting the exam.
    • T-accounts: Use T-accounts to solve problems, beginning with the original transaction where possible.

    Recall and Definitions (Chapters 1-2)

    • New Terms: Memorize all new terms introduced in chapters 1 and 2.
    • Account Definitions: Understand each basic account including:
      • Account name
      • Definition
      • Account major category
      • Financial statement where the account appears
      • Normal balance (debit or credit)
    • Transaction Impact: Conceptually analyze how different business transactions affect specific accounts (e.g., a customer paying cash in advance impacts deferred revenue).

    Accounting Process Overview (Chapter 1)

    • Primary Functions: Accounting's primary role is measuring and communicating information.
    • Accounting Equation: Define and apply the accounting equation (draw it on your exam paper).
    • Financial Statements: Recall the definitions, formats, and interrelationships of the income statement, statement of stockholders' equity, and the balance sheet.

    Accounting Process During the Period (Chapter 2)

    • Business Transactions: Understand common business transactions and how they affect different accounts. Examples are provided in the text.
    • Accounting Equation Impacts: Illustrate how transactions impact the accounting equation, with an emphasis on the impact through debits and credits on different accounts.
    • Journal Entries and Posting: Understand recording journal entries and posting to the general ledger.
    • Trial Balance: Constructing an unadjusted trial balance from account balances.

    Additional Study Aids

    • Self-Study Questions: Review the self-study questions at the end of each chapter (numbers 3-10 and 12).

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    Related Documents

    ACG 2021 Exam 1 Study Guide - PDF

    Description

    Prepare for your Accounting Exam 1 with this comprehensive study guide covering Chapters 1 and 2. Focus on essential concepts like the accounting equation, T-accounts, and key definitions that will help you excel in your exam. Make sure to memorize new terms and understand their impacts on financial statements.

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