Accounting exam 1 chapter 2

Question 1

1. What are the common accounts you will find in assets, liabilities, and equity?

Answer 1

Assets: cash, supplies, equipment, accounts receivable
Liabilities: Accounts payable, Loans, Wage expenses, unearned revenue, income tax payable
Equity: Common stock, dividends, retained earnings, inventory

Question 2

2. What’s a debit and what’s a credit?

Answer 2

Debits record incoming money Credits record outgoing money

Question 3

4. Can you make journal entries from common transactions (like we did with Consulto, Inc. and many of the homework problems)?

Question 4

5. Can you create the income statement, the statement of changes in equity, and the balance sheet if you have the year-end balances in the T-accounts?

Question 5

6. What is the debt to assets ratio?

Answer 5

total debt/total assets

Question 6

7. How do you interpret the debt to assets ratio?

Answer 6

how much debt you have compared to assets. having a debt ration under 1 is good