ACCT 2101 final exam study guide questions with accurate
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detailed solutions ||
Retained Earnings Statement - ✔✔A financial statement that summarizes the amounts and causes
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of changes in retained earnings for a specific time period.
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Retained Earnings Equation - ✔✔Beginning Retained Earnings + Net Income - Dividends =
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Ending Retained Earnings
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Property, plant, and equipment (PP&E) - ✔✔assets with relatively long useful lives that are
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currently used in operating the business. For example, buildings, factories, automobiles, etc.
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Assets - ✔✔money and other valuables belonging to an individual or business
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Liabilities - ✔✔Amounts owed to creditors || || || || ||
Stockholders' Equity - ✔✔-The owners claim to the assets || || || || || || || ||
-Common stock and Retained earnings || || || ||
Total Stockholders Equity equation - ✔✔(total contributed capital + total retained earnings) -
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treasury stock ||
Accounting Equation - ✔✔An equation showing the relationship among assets, liabilities, and
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owner's equity ||
assets= liabilities + stockholders equity
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Book Value (Depreciation) - ✔✔an asset's original cost, less any accumulated depreciation and
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impairment charges that have been subsequently incurred || || || || || ||
, Straight Line Depreciation Formula - ✔✔(cost - salvage value) / useful life
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Adjusting Entries - ✔✔Entries made at the end of an accounting period to ensure that the revenue
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recognition and expense recognition principles are followed.
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What are the four types of adjusting entries? - ✔✔Deferrals: Prepaid Expenses and Unearned
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Revenues
Accruals: Accrued Revenues and Accrued Expenses
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Example of Deferrals: Prepaid Expenses - ✔✔a payment made in December for property
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insurance covering the next six months of January through June
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Example of Deferrals: Unearned Revenues - ✔✔rent payments received in advance
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Example of Accruals: Accrued Revenues - ✔✔a company has earned revenue but hasn't billed a
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client for payment
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Example of Accruals: Accrued Expenses - ✔✔a company has received the product but have not
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yet paid for it
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Bad Debt Expense - ✔✔The amount of the adjustment to the allowance for uncollectible
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accounts, representing the cost of estimated future bad debts charged to the current period.
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Revenue Recognition Principle - ✔✔Record revenue in the period in which it's earned
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Expense Recognition Principle - ✔✔Record expenses in the period in which it's incurred
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Normal Balance Debit - ✔✔assets, expenses, dividends
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detailed solutions ||
Retained Earnings Statement - ✔✔A financial statement that summarizes the amounts and causes
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of changes in retained earnings for a specific time period.
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Retained Earnings Equation - ✔✔Beginning Retained Earnings + Net Income - Dividends =
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Ending Retained Earnings
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Property, plant, and equipment (PP&E) - ✔✔assets with relatively long useful lives that are
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currently used in operating the business. For example, buildings, factories, automobiles, etc.
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Assets - ✔✔money and other valuables belonging to an individual or business
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Liabilities - ✔✔Amounts owed to creditors || || || || ||
Stockholders' Equity - ✔✔-The owners claim to the assets || || || || || || || ||
-Common stock and Retained earnings || || || ||
Total Stockholders Equity equation - ✔✔(total contributed capital + total retained earnings) -
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treasury stock ||
Accounting Equation - ✔✔An equation showing the relationship among assets, liabilities, and
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owner's equity ||
assets= liabilities + stockholders equity
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Book Value (Depreciation) - ✔✔an asset's original cost, less any accumulated depreciation and
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impairment charges that have been subsequently incurred || || || || || ||
, Straight Line Depreciation Formula - ✔✔(cost - salvage value) / useful life
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Adjusting Entries - ✔✔Entries made at the end of an accounting period to ensure that the revenue
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recognition and expense recognition principles are followed.
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What are the four types of adjusting entries? - ✔✔Deferrals: Prepaid Expenses and Unearned
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Revenues
Accruals: Accrued Revenues and Accrued Expenses
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Example of Deferrals: Prepaid Expenses - ✔✔a payment made in December for property
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insurance covering the next six months of January through June
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Example of Deferrals: Unearned Revenues - ✔✔rent payments received in advance
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Example of Accruals: Accrued Revenues - ✔✔a company has earned revenue but hasn't billed a
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client for payment
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Example of Accruals: Accrued Expenses - ✔✔a company has received the product but have not
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yet paid for it
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Bad Debt Expense - ✔✔The amount of the adjustment to the allowance for uncollectible
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accounts, representing the cost of estimated future bad debts charged to the current period.
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Revenue Recognition Principle - ✔✔Record revenue in the period in which it's earned
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Expense Recognition Principle - ✔✔Record expenses in the period in which it's incurred
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Normal Balance Debit - ✔✔assets, expenses, dividends
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