Lemonade Stand Accounting Quiz
19 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which of the following best describes Retained Earnings?

  • Earnings of only the current week
  • Earnings from past accounting periods (correct)
  • Earnings that are still pending
  • Earnings from the upcoming week

When was the Ending Balance Sheet prepared?

  • At the end of last week (correct)
  • At the end of the current week
  • At the beginning of week number 2
  • During the first week of business

What happens to last week’s Ending Inventory as the new week begins?

  • It is merged with current Inventory
  • It becomes the Ending Inventory for this week
  • It is discarded from the records
  • It is now considered Beginning Inventory (correct)

What must be done with last week's earnings when creating the new Balance Sheet?

<p>They are rolled into Retained Earnings (A)</p> Signup and view all the answers

What are the two main outcomes for earnings in a business?

<p>Retain in the business or distribute to owners (C)</p> Signup and view all the answers

How are earnings updated at the beginning of a new week?

<p>By rolling up the earnings and retaining them in the company (D)</p> Signup and view all the answers

What did the banker's response imply when asked if they give loans to kids?

<p>They do not discriminate based on age (B)</p> Signup and view all the answers

How much cash did the business owner claim to have in their balance sheet?

<p>$13.00 (A)</p> Signup and view all the answers

What was the total amount of sales reported for the previous week?

<p>$25.00 (B)</p> Signup and view all the answers

What was the gross profit mentioned in the scenario?

<p>$15 (B)</p> Signup and view all the answers

How much cash did the banker loan?

<p>$50.00 (B)</p> Signup and view all the answers

Which account reflects the amount owed to the banker?

<p>Notes payable (C)</p> Signup and view all the answers

What was the return on investment after selling the lemonade?

<p>200% (B)</p> Signup and view all the answers

What happened to the inventory when the lemonade was sold to the friend?

<p>Decreased to zero (C)</p> Signup and view all the answers

How much cash was added after selling the lemonade to the friend?

<p>$2.00 (C)</p> Signup and view all the answers

Did the sale of lemonade generate profit?

<p>No, but it generated cash (B)</p> Signup and view all the answers

Will the lemonade sale transaction appear on the Income Statement?

<p>Yes, as total sales (A)</p> Signup and view all the answers

What is suggested to be included in the Income Statement at the end of the week?

<p>Sales from lemonade (D)</p> Signup and view all the answers

What is indicated by checking if the financial results are in balance?

<p>Agreement between assets and liabilities (A)</p> Signup and view all the answers

Study Notes

Lemonade Stand Accounting

  • The lemonade stand owner starts the week with a beginning inventory of lemonade, which was the ending inventory from the previous week.
  • The owner also has retained earnings from the previous week, which are earnings from past accounting periods.
  • The owner takes out a loan from a bank, increasing cash and creating Notes Payable (liability).
  • The owner sells remaining inventory for cash to a friend at cost, reducing inventory and increasing cash.
  • The owner purchases sugar on credit from the grocery store, increasing inventory and creating Accounts Payable (liability).
  • Notes Payable is a liability for money borrowed from a bank, and Accounts Payable is a liability for goods or services purchased on credit.
  • Notes Payable is typically long-term, while Accounts Payable is short-term.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

Accounting Chapter 3 PDF

Description

Test your knowledge on basic accounting principles through the scenario of a lemonade stand. This quiz covers concepts such as inventory management, liabilities, and cash flow. Understand how retained earnings, loans, and purchasing on credit affect a small business's finances.

More Like This

Lemonade Stand Laws and Regulations
14 questions
Chapter 7
9 questions

Chapter 7

LawfulJadeite avatar
LawfulJadeite
Chapter 1
3 questions

Chapter 1

LawfulJadeite avatar
LawfulJadeite
Use Quizgecko on...
Browser
Browser