Intro to Accounting

Question 1

What is the fundamental accounting equation?

Answer 1

Assets=Liabilities + Stockholder’s Equity

Question 2

What is the entry when you borrow $100 cash?

Answer 2

Cash increases 100. Notes payable increases $100.

Question 3

What are seasoned equity offerings?

Answer 3

Stock offerings (sales of shares) that occur after an IPO.

Question 4

What is the entry if you sell $100 in stock?

Answer 4

$100 increase in cash.

$100 increase in common stock/APIC

Question 5

What would the entry be if you sold $20 worth of inventory for $80 cash?

Answer 5

Cash increases $80. Inventory ($20).

Revenue increases $80. COGS ($20).

Question 6

Is depreciation expense and interest expense included in pre-tax income?

Answer 6

Yes.

Both are adjusted for in cash flow from operations, but only depreciation is included in operating income. Interest expense/income are not in operating income.

Question 7

What is the journal entry for $7 in taxes that were incurred for a specific period but will be paid at a later date?

Answer 7

Taxes payable $7

Tax Expense ($7)

Question 8

What does retained earnings represent?

Answer 8

The cumulative net income excluding dividends since the inception of the company.

Question 9

Debt and stock journal entries would be which type of cash flow adjustment?

Building journal entries would typically be which type of cash flow adjustment?

Inventory, sales, and wages journal entries would be which type of cash flow adjustment?

Answer 9

Financing

Investing

Operating