Accounting Game Chapter 3

Questions and Answers

What is the typical duration for Accounts Payable?

Usually due in full in maybe thirty days.

What is the primary difference between Accounts Payable and Notes Payable?

Notes Payable is long-term, usually due in several years.

Accounts Payable usually has interest associated with it.

False

Which of the following statements is true about interest on loans?

Notes Payable generally has interest. Signup and view all the answers

How much inventory do you receive when you buy 100 lemons at 20 cents each?

Twenty dollars in inventory. Signup and view all the answers

What should you expect your total assets to be after receiving inventory worth $20?

$69 in Assets. Signup and view all the answers

You exchange $20.00 in cash for what? __________.

Twenty dollars in inventory Signup and view all the answers

After updating your financial records, you should be in balance with $54 in Liabilities and $15 in Equity.

True Signup and view all the answers

What type of Balance Sheet is created at the beginning of a new week?

Beginning Balance Sheet Signup and view all the answers

What do we call earnings from past accounting periods?

Retained Earnings Signup and view all the answers

What is the total cash amount after borrowing $50 from the bank, starting with $13.00?

$63.00 Signup and view all the answers

The ending inventory from last week becomes the beginning inventory for this week.

True Signup and view all the answers

Retained Earnings show us all the earnings in a business from when? From ____ accounting periods.

prior Signup and view all the answers

What is the term for the amount owed to the banker?

Notes Payable Signup and view all the answers

Which transaction shows an increase in cash due to the sale of lemonade?

Selling inventory for cash Signup and view all the answers

What financial category do we record when we purchase goods on credit?

Accounts Payable Signup and view all the answers

Match the following financial concepts with their descriptions:

Assets = Resources owned by the business Liabilities = Obligations owed to others Retained Earnings = Profits not distributed to owners Accounts Payable = Short-term liabilities for goods or services received Signup and view all the answers

All small businesses have to pay a dividend to their owners.

False Signup and view all the answers

What is Accounts Payable?

Short-term liabilities usually due in full in about thirty days. Signup and view all the answers

What is Notes Payable?

Long-term liabilities that may be due in several years. Signup and view all the answers

Accounts Payable generally comes with interest.

False Signup and view all the answers

What do both Accounts Payable and Notes Payable establish?

Credit. Signup and view all the answers

How much do you pay for 100 lemons at 20 cents each?

$20.00 Signup and view all the answers

When paying for lemons in cash, what account does the amount go into?

Inventory. Signup and view all the answers

What should total Assets amount to after recording the transactions?

$69. Signup and view all the answers

What should total Liabilities amount to after recording the transactions?

$54. Signup and view all the answers

What should total Equity amount to after recording the transactions?

$15. Signup and view all the answers

The company is in balance after all transactions are recorded.

True Signup and view all the answers

What is the Ending Balance Sheet for last week called?

Ending Balance Sheet Signup and view all the answers

What does the Ending Inventory from last week become for this week?

Beginning Inventory Signup and view all the answers

What are earnings from past accounting periods called?

Retained Earnings Signup and view all the answers

Earnings Week to Date represents earnings from past accounting periods.

False Signup and view all the answers

What do real businesspeople borrow money from?

A real bank Signup and view all the answers

What did the banker say about giving loans to kids?

They don't discriminate because of a potential customer's age. Signup and view all the answers

How much cash did the bank loan?

$50.00 Signup and view all the answers

What do we show the $50.00 loan from the bank as?

Notes payable Signup and view all the answers

What inventory did the character purchase from Pappy?

Sugar Signup and view all the answers

What was the total cost for the sugar purchased?

$4.00 Signup and view all the answers

What type of account was set up with Pappy for the sugar purchase?

Accounts Payable Signup and view all the answers

What is the difference between Notes Payable and Accounts Payable?

Notes Payable is a loan, while Accounts Payable is for goods or services received. Signup and view all the answers

What is Accounts Payable?

Short-term liabilities usually due in full in maybe thirty days. Signup and view all the answers

What is Notes Payable?

Long-term liabilities that may take several years to pay off. Signup and view all the answers

Which has interest? (Select one)

Notes Payable Signup and view all the answers

What do both Accounts Payable and Notes Payable establish?

Credit Signup and view all the answers

You buy 100 lemons at 20 cents/lemon. How much cash do you exchange?

$20.00 Signup and view all the answers

What goes into Inventory when you pay cash for lemons?

$20.00 in lemons Signup and view all the answers

What should your totals add up to after accounting for assets and liabilities?

$69 in Assets, $54 in Liabilities, and $15 in Equity Signup and view all the answers

Accounts Payable typically comes with interest.

False Signup and view all the answers

What type of Balance Sheet is last week's report?

Ending Balance Sheet Signup and view all the answers

What does last week's Ending Inventory become for this week?

Beginning Inventory Signup and view all the answers

What are earnings from past accounting periods called?

Retained Earnings Signup and view all the answers

What amount needs to be rolled up into Retained Earnings?

$10 Signup and view all the answers

How much money was borrowed from Mom and Dad?

$10 Signup and view all the answers

The banker discriminates against kids when giving loans.

False Signup and view all the answers

What was the total sales amount from last week?

$25 Signup and view all the answers

What is the return on investment if $5 was invested and $10 was earned?

200 percent Signup and view all the answers

What financial category do you set up with the grocer?

Accounts Payable Signup and view all the answers

What kind of Liability represents money owed to the bank?

Notes Payable Signup and view all the answers

How much credit was given to the lemonade seller by Pappy?

$4.00 Signup and view all the answers

Study Notes

Lemonade Stand Accounting

A sunny Monday morning is ideal for selling lemonade, presenting opportunities for profit.
The last week's Ending Balance Sheet indicates a cash balance of 13.00andatotalowner’sequityof13.00 and a total owner’s equity of 13.00andatotalowner’sequityof15.00.
Ending inventory from one week becomes the Beginning Inventory for the next week.
Transitioning from Ending to Beginning Balance Sheet requires accounting for retained earnings from the previous week.
Retained Earnings accumulate earnings not distributed as dividends, showing past financial performance.

Debt and Business Growth

Real business growth involves seeking loans from traditional banks rather than relying on family.
The protagonist confidently presents their financial records to the banker, boasting 13.00incash,zerodebt,and13.00 in cash, zero debt, and 13.00incash,zerodebt,and10 in retained earnings.
The banker, impressed by the organized financial records, agrees to loan $50.00, increasing cash and notes payable in the balance sheet.

Inventory Management

After receiving a loan, the protagonist sells remaining inventory for $2.00, converting it into cash while retaining no inventory.
The change in inventory affects the Income Statement but does not impact total asset value.

Building Credit and Accounts Payable

The protagonist seeks credit from Pappy Parker at the grocery store, attempting to establish an account for purchasing supplies.
The terms "Notes Payable" (bank loans) and "Accounts Payable" (credit for goods/services) categorize different types of liabilities.
Notes Payable generally involves cash received with an interest obligation, while Accounts Payable pertains to goods received without interest unless payment is late.

Purchase and Inventory Increase

Cash is used to purchase inventory, such as 100 lemons for $20.00, reflecting an asset exchange with no net change in total assets.
Transactions should maintain balance in the balance sheet, ensuring total assets match total liabilities plus equity.

Lemonade Stand Accounting

A sunny Monday morning is ideal for selling lemonade, presenting opportunities for profit.
The last week's Ending Balance Sheet indicates a cash balance of 13.00andatotalowner’sequityof13.00 and a total owner’s equity of 13.00andatotalowner’sequityof15.00.
Ending inventory from one week becomes the Beginning Inventory for the next week.
Transitioning from Ending to Beginning Balance Sheet requires accounting for retained earnings from the previous week.
Retained Earnings accumulate earnings not distributed as dividends, showing past financial performance.

Debt and Business Growth

Real business growth involves seeking loans from traditional banks rather than relying on family.
The protagonist confidently presents their financial records to the banker, boasting 13.00incash,zerodebt,and13.00 in cash, zero debt, and 13.00incash,zerodebt,and10 in retained earnings.
The banker, impressed by the organized financial records, agrees to loan $50.00, increasing cash and notes payable in the balance sheet.

Inventory Management

After receiving a loan, the protagonist sells remaining inventory for $2.00, converting it into cash while retaining no inventory.
The change in inventory affects the Income Statement but does not impact total asset value.

Building Credit and Accounts Payable

The protagonist seeks credit from Pappy Parker at the grocery store, attempting to establish an account for purchasing supplies.
The terms "Notes Payable" (bank loans) and "Accounts Payable" (credit for goods/services) categorize different types of liabilities.
Notes Payable generally involves cash received with an interest obligation, while Accounts Payable pertains to goods received without interest unless payment is late.

Purchase and Inventory Increase

Cash is used to purchase inventory, such as 100 lemons for $20.00, reflecting an asset exchange with no net change in total assets.
Transactions should maintain balance in the balance sheet, ensuring total assets match total liabilities plus equity.

Lemonade Stand Accounting

A sunny Monday morning is ideal for selling lemonade, presenting opportunities for profit.
The last week's Ending Balance Sheet indicates a cash balance of 13.00andatotalowner’sequityof13.00 and a total owner’s equity of 13.00andatotalowner’sequityof15.00.
Ending inventory from one week becomes the Beginning Inventory for the next week.
Transitioning from Ending to Beginning Balance Sheet requires accounting for retained earnings from the previous week.
Retained Earnings accumulate earnings not distributed as dividends, showing past financial performance.

Debt and Business Growth

Real business growth involves seeking loans from traditional banks rather than relying on family.
The protagonist confidently presents their financial records to the banker, boasting 13.00incash,zerodebt,and13.00 in cash, zero debt, and 13.00incash,zerodebt,and10 in retained earnings.
The banker, impressed by the organized financial records, agrees to loan $50.00, increasing cash and notes payable in the balance sheet.

Inventory Management

After receiving a loan, the protagonist sells remaining inventory for $2.00, converting it into cash while retaining no inventory.
The change in inventory affects the Income Statement but does not impact total asset value.

Building Credit and Accounts Payable

The protagonist seeks credit from Pappy Parker at the grocery store, attempting to establish an account for purchasing supplies.
The terms "Notes Payable" (bank loans) and "Accounts Payable" (credit for goods/services) categorize different types of liabilities.
Notes Payable generally involves cash received with an interest obligation, while Accounts Payable pertains to goods received without interest unless payment is late.

Purchase and Inventory Increase

Cash is used to purchase inventory, such as 100 lemons for $20.00, reflecting an asset exchange with no net change in total assets.
Transactions should maintain balance in the balance sheet, ensuring total assets match total liabilities plus equity.

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Description

In this chapter, we explore the business of selling lemonade and the basics of creating a balance sheet. It discusses the importance of assets and liabilities for a budding entrepreneur. Get ready to dive into the world of beverage sales and financial management!

Accounting Game Chapter 3

Questions and Answers

What is the typical duration for Accounts Payable?

What is the primary difference between Accounts Payable and Notes Payable?

Accounts Payable usually has interest associated with it.

Which of the following statements is true about interest on loans?

How much inventory do you receive when you buy 100 lemons at 20 cents each?

What should you expect your total assets to be after receiving inventory worth $20?

You exchange $20.00 in cash for what? __________.

After updating your financial records, you should be in balance with $54 in Liabilities and $15 in Equity.

What type of Balance Sheet is created at the beginning of a new week?

What do we call earnings from past accounting periods?

What is the total cash amount after borrowing $50 from the bank, starting with $13.00?

The ending inventory from last week becomes the beginning inventory for this week.

Retained Earnings show us all the earnings in a business from when? From ____ accounting periods.

What is the term for the amount owed to the banker?

Which transaction shows an increase in cash due to the sale of lemonade?

What financial category do we record when we purchase goods on credit?

Match the following financial concepts with their descriptions:

All small businesses have to pay a dividend to their owners.

What is Accounts Payable?

What is Notes Payable?

Accounts Payable generally comes with interest.

What do both Accounts Payable and Notes Payable establish?

How much do you pay for 100 lemons at 20 cents each?

When paying for lemons in cash, what account does the amount go into?

What should total Assets amount to after recording the transactions?

What should total Liabilities amount to after recording the transactions?

What should total Equity amount to after recording the transactions?

The company is in balance after all transactions are recorded.

What is the Ending Balance Sheet for last week called?

What does the Ending Inventory from last week become for this week?

What are earnings from past accounting periods called?

Earnings Week to Date represents earnings from past accounting periods.

What do real businesspeople borrow money from?

What did the banker say about giving loans to kids?

How much cash did the bank loan?

What do we show the $50.00 loan from the bank as?

What inventory did the character purchase from Pappy?

What was the total cost for the sugar purchased?

What type of account was set up with Pappy for the sugar purchase?

What is the difference between Notes Payable and Accounts Payable?

What is Accounts Payable?

What is Notes Payable?

Which has interest? (Select one)

What do both Accounts Payable and Notes Payable establish?

You buy 100 lemons at 20 cents/lemon. How much cash do you exchange?

What goes into Inventory when you pay cash for lemons?

What should your totals add up to after accounting for assets and liabilities?

Accounts Payable typically comes with interest.

What type of Balance Sheet is last week's report?

What does last week's Ending Inventory become for this week?

What are earnings from past accounting periods called?

What amount needs to be rolled up into Retained Earnings?

How much money was borrowed from Mom and Dad?

The banker discriminates against kids when giving loans.

What was the total sales amount from last week?

What is the return on investment if $5 was invested and $10 was earned?

What financial category do you set up with the grocer?

What kind of Liability represents money owed to the bank?

How much credit was given to the lemonade seller by Pappy?

Study Notes

Lemonade Stand Accounting

Debt and Business Growth

Inventory Management

Building Credit and Accounts Payable

Purchase and Inventory Increase

Lemonade Stand Accounting

Debt and Business Growth

Inventory Management

Building Credit and Accounts Payable

Purchase and Inventory Increase

Lemonade Stand Accounting

Debt and Business Growth

Inventory Management

Building Credit and Accounts Payable

Purchase and Inventory Increase

Studying That Suits You

Description

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