Name: Keyjun Brent Hale
Date:
Period:
Accounting I
State Test Review
Standard 1: Students will understand accounting terminology and basic business structures.
1. Define accounting and explain the purpose of accounting.
Planning, recording, analyzing, and interpreting financial information
2. What is GAAP and what is it used for?
Generally Accepted Accounting Principals; the standards and rules to follow while recording
and reporting financial activities
3.
Type of Business
Ownership
Advantages of this
type of business
ownership
Disadvantages of this
type of business
ownership
Sole Proprietorship
Partnership
Corporation
You are the boss
Two people share the
company less of a
work load
if you are not able to
communicate it is
hard
A group of people to
help with a job
No one to share the
load
Lots of people must
have really good
communication
4.
Type of Business
Service Business
Merchandising
Business
Manufacturing
Business
Define each type of
business.
A business that
performs an
activity for a fee
A business that
purchases and
sells goods
Manufacturing
business is the
process of raw
materials or parts
into finished goods
Standard 2: Students will list and identify characteristics of the three basic accounting equation
elements. (Chapter 1)
5. Write the accounting equation.
A+l=E
6. List and define each part of the accounting equation.
Asset anything of value
Liability is Debt or things that make you liable
Amount of the owner has
7. Classify each item listed below as an asset, liability, or owner’s equity by placing a check mark in
the Asset, Liability, or Owner’s Equity column.
Account
Asset
Cash
Owner’s
Equity
Liability
*
Alice Jones, Capital
*
Prepaid Insurance
*
Accounts Payable – Steward Supply Company
*
Supplies
*
Any amount owed
*
Owner’s capital account
*
Anything owned
*
8. Balance the accounting equation.
Assets
19,000
=
Liabilities
9,000
+
Owner’s Equity
10000
27500
6,500
21,000
51,570
11820
39,750
28,000
6000
22,000
27000
10,000
17,000
24,985
5,000
19985
10,000
0
10,000
71000
25,000
46,000
34,879
18,450
125,540
36,000
16429
89540
9. Explain why the accounting equation must be in balance.
How to check to make sure everything is the same
Standard 3: Students will apply the theory of debit and credit to the accounting equation, define a
business transaction, and show how and why accounts are increased and decreased.
(Chapter 2)
1. What is a business transaction?
Business transactions are purchases made by the business whether it be supplies or insurance
2. For each account listed, assign an account number in the chart of accounts.
Account Title
Cash in Bank
George Smith, Capital
Accounts Payable – Allen Systems
Accounts Receivable – Abe Dunn
Revenue/Sales
George Smith, Drawing
Advertising Expense
Supplies
Rent Expense
Prepaid Insurance
Account Number
110
310
210
120
410
320
420
120
430
130
3. Decide which accounts in the accounting equation are changed by each of the following
transactions. Place a plus (+) in the appropriate column if the account is increased. Place a minus (-)
in the appropriate column if the account is decreased.
Transactions
1.
Received cash from owner as an investment.
2.
Received cash from sales.
3.
Paid cash for telephone bill.
4.
Paid cash for advertising.
5.
Paid cash to owner for personal use.
6.
Paid cash for rent.
7.
Paid cash for equipment repairs.
8.
Bought supplies on account from Maxwell Company.
9.
Paid cash for insurance.
10.
Paid cash on account to Maxwell Company.
Assets
Trans.
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Cash
+
Supplies
+
Prepaid
Insurance
=
Liabilities
+
Owner’s Equity
=
Accts. Payable
Maxwell
Company
+
Susan Sanders,
Capital
+
+
+
+
-
+
-
+
+
-
4. Determine how each transaction affects the accounting equation; analyze transactions into debit
and credit parts.
Cash
Sales
Supplies
Advertising Expense
Prepaid Insurance
Miscellaneous Expense
Accounts Payable—Miller Supplies
Rent Expense
Jeff Dixon, Capital
Repair Expense
Jeff Dixon, Drawing
Utilities Expense
1.
2.
3.
4.
Using the account titles shown above, write the accounts affected in Column 2.
For each account title, write the account classification in Column 3.
For each account title, place a check mark in either Column 4 or 5 to indicate the normal balance.
For each account title, place a check mark in either Column 6 or 7 to indicate if the account is
increased (+) or decreased (-) by this transaction.
5. For each account title, place a check mark in either Column 8 or 9 to indicate if the account is
changed by a debit or a credit.
Transactions
1. Received cash from owner as an investment.
2. Paid cash for supplies.
3. Paid cash for insurance.
4. Bought supplies on account from Miller Supplies.
5. Paid cash on account to Miller supplies.
6. Paid cash for rent.
7. Received cash from sales.
8. Paid cash to owner for personal use.
9. Paid cash for telephone bill (utilities expense).
1
2
3
Trans.
No.
Accounts
Affected
Account
Classification
1.
2.
3.
4.
5.
6.
7.
8.
9.
Cash
Jeff Dixon, Capital
supplies
cash
4
5
Account’s Normal
Balance
Debit
Credit
*
6
7
How is Account
Affected?
+
-
+
*
*
*
+
*
+
*
8
9
Entered in
Account as
Debit
Credit
*
-
*
Standard 4: Students will identify and use source documents for journalizing transactions; students
will post journal entries to a ledger. (Chapter 3 & 4)
1. List five different source documents and identify what type of transaction each source document
would be used for.
2. Bank statement. ...
3. Cash register tape. ...
4. Credit card receipt. ...
5. Lockbox check images. ...
6. Packing slip. ...
7. Sales order. ...
8. Supplier invoice.
9. What is the purpose of the General Journal?
A general journal is a book of chronological record of transactions
10. What are the steps in journalizing? (in order)
1.
2.
3.
4.
5.
6.
7.
8.
9.
Analyze business transactions.
Journalize the transactions.
Post to ledger accounts.
Prepare a trial balance.
Journalize and post adjusting entries.
Prepare an adjusted trial balance.
Prepare financial statements.
Journalize and post closing entries.
Prepare a post-closing trial balance.
11. What is the purpose of the General Ledger?
a general ledger is used to record all of a company's transactions
12. What the steps in posting? (in order)
13. to write the date of the journal entry in the date column of the account debited
2. the description column on the ledger account is usually left blank. some businesses use this space to
write in the source document number.
3. enter journal letter and page number in post. ref. column
4. enter the debit amount (Posting to the ledger)
5. compute the new account balance
14. Explain the purpose of the posting references?
referencing between the journal and the ledger
15. What is recorded in the Post. Ref. column of the General Ledger account?
the post reference identifies the specific location in the journal, like a page number or line number,
where a transaction was recorded.
16. What is recorded in the Post. Ref. column of the General Journal?
the post reference identifies the specific location in the journal, like a page number or line number,
where a transaction was recorded
17. Analyze each transaction listed below.
1. Write the source document for each transaction in Column 2.
2. Using the following account titles, write the accounts affected by each transaction in Column 3.
Cash
Sales
Accounts Receivable—Darnell Lee
Advertising Expense
Supplies
Miscellaneous Expense
Prepaid Insurance
Rent Expense
Accounts Payable—Gable Supplies
Repair Expense
Mary Jacobs, Capital
Utilities Expense
Mary Jacobs, Drawing
3. For each account title, write the account classification in Column 4.
4. For each account title, place a check mark in either Column 5 or 6 to indicate the normal
balance.
5. For each account title, place a check mark in either Column 7 or 8 to indicate if the account is
increased (+) or decreased (-) by this transaction.
6. For each account title, place a check mark in either Column 9 or 10 to indicate if the account is
changed by a debit or a credit.
Transactions
1. Paid cash for advertising.
2. Paid cash for repairs.
3. Received cash from owner as an investment.
4. Paid cash for miscellaneous expense.
5. Bought supplies on account from Gable Supplies.
6. Paid cash on account to Gable Supplies.
7. Paid cash for water bill.
8. Paid cash for supplies.
9. Paid cash for rent.
10. Sold services on account to Darnell Lee
11. Received cash from sales.
12. Paid cash for insurance.
1
Trans.
No.
1.
2.
3.
4.
5.
2
Source
Document
3
4
Accounts
Affected
Account
Classification
5
6
Account’s Normal
Balance
Debit
Credit
7
8
How Is Account
Affected?
+
-
9
10
Entered in Account as
a
Debit
Credit
6.
7.
8.
9.
10.
11.
12.
Standard 5: Students will prepare, analyze and interpret financial statements. (Chapter 6)
1. Determine the General Ledger account balance.
1.
Beg. Balance
Debit
Credit
Debit
800
500
2.
3.
650
5.
150
6.
1300
360
435
0
New Balance
Debit
Credit
250
575
4.
Credit
900
215
100
335
775
300
400
690
625
290
7.
290
850
40
1100
8.
0
239
100
139
2. What is the purpose of the trial balance?
ensure that everything on the general ledger is properly balanced
3. What are the steps for preparing a Work Sheet?
4. Name of business organization and preparation date.
5. Drawing column and mentioning the head of the column.
6. Unadjusted Trial Balance.
7. Adjustment column.
8. Adjusted trial balance column.
9. Income statement column.
10. Retained earnings statement.
11. Balance sheet.
12. Extending account balances on a work sheet
1. Place a check mark in either Column 1 or 2 to indicate the Trial Balance column in which each
account’s balance will appear.
2. Place a check mark in Columns 5, 6, 7, or 8 to indicate the column to which each up-to-date
account balance will be extended.
1
2
Trial Balance
Debit
Credit
Account Title
*
*
1. Advertising Expense
2. Accts. Pay.--Bell Supply
5
6
Income Statement
Debit
Credit
*
*
*
3. Cash
*
*
4. Miscellaneous Expense
*
*
*
*
5. Maria Dorn, Capital
6. Maria Dorn, Drawing
7. Prepaid Insurance
*
*
*
*
*
*
8. Rent Expense
9. Repair Expense
10. Sales
*
*
*
*
11. Supplies
*
*
*
12. Utilities Expense
7
8
Balance Sheet
Debit
Credit
13. Calculating net income or net loss on a work sheet
The column totals from five different work sheets are given on the form below.
Complete the following for each company.
1. Calculate the amount of net income or net loss. Write the amount on line 2 in the correct
columns. Label the amount as Net Income or Net Loss.
2. Add the amounts in each column. Write the totals on line 3.
3. Verify the accuracy of your proving totals.
Debit
Income Statement
Credit
$9,500
Balance Sheet
Debit
$35,500
Credit
1. Column totals
$9,000
$35,000
2. Net income
500
3. Proving totals
9500
9500
35500
35500
1. Column totals
$1,500
$2,000
$7,500
$7,000
2. Net income
500
3. Proving totals
2000
500
500
2000
7500
7500
1. Column totals
$5,200
2. Net loss
$4,800
$26,500
400
400
$26,900
3. Proving totals
5200
5200
26900
26900
1. Column totals
$5,300
$8,150
$34,950
$32,100
2. Net income
2850
2850
3. Proving totals
8150
34950
1. Column totals
$5,300
2. Net loss
3. Proving totals
5300
$4,130
$33,400
1170
1170
5300
34570
$34,570
34570
Standard 5: Students will prepare, analyze and interpret financial statements. (Chapter 7)
1. What document is used to prepare the financial statements?
2. What is the purpose of the Income Statement?
3. What information is reported on the Income Statement?
4. What is the purpose of the Balance Sheet?
5. What information is reported on the Balance Sheet?
6. Preparing an Income Statement and Balance Sheet
From the work sheet below, prepare an income statement and balance sheet for The Sound of
Stone.
Complete the following.
1. Total all columns of the work sheet
2. Calculate and record the amount of net income or net loss.
3. Using the form on the next page, prepare an income statement for the month ended
September 30, 20--.
4. Calculate and record the component percentages for total expenses and net income. Round
percentages to the nearest 0.1%
5. Prepare the September 30, 20-- balance sheet for The Sound of Stone.
Account Title
1. Cash
2. Petty Cash
3. Accts. Rec.—HartCo
4. Accts. Rec.—Starlite Club
5. Supplies
6. Prepaid Insurance
7. Accts. Pay.—First Audio
8. Accts. Pay.—Office Supply Co.
9. Shannon Stone, Capital
10. Shannon Stone, Drawing
11. Income Summary
12. Sales
13. Advertising Expense
14. Insurance Expense
15. Miscellaneous Expense
16. Rent Expense
17. Supplies Expense
18. Utilities Expense
20. Net Income
1
2
Trial Balance
Debit
Credit
3
4
Adjustments
Debit
Credit
8,272
200
100
720
4,051
1,200
5
6
Income Statement
Debit
Credit
7
8
Balance Sheet
Debit
Credit
8,272
200
100
720
1,487
1,100
2,564
100
1,360
20
10,000
1,360
20
10,000
600
600
4,411
4,411
273
100
10
250
2,564
115
273
100
10
250
2,564
115
Income Statement
% of
Sales
Balance Sheet
7. Determine the ending capital balances.
1.
2.
3.
4.
Beginning
Capital
Investments
Revenue
Expenses
Withdrawals
10,000
0
25,000
45,785
5,000
25,000
10,000
0
20,000
30,000
50,000
66,350
5,000
50,000
10,000
15,900
3,000
5,000
6,000
5,000
Ending Capital
Standard 6: Students will prepare adjusting and closing entries and a post-closing trial balance.
(Chapter 8)
1. What is the difference between permanent and temporary accounts?
2. Determining accounts affected by adjusting and closing entries
1. For each account title on the chart, place a check mark in either Column 2 or 3 to indicate
whether the account is affected by an adjusting entry.
2. For each account title on the chart, place a check mark in either Column 4 or 5 to indicate
whether the account is affected by a closing entry.
3. For each account title on the chart, place a check mark in either Column 6 or 7 to indicate
whether the account has a balance after closing entries are posted.
1
Account Title
2
3
Account Is Affected by
an Adjusting Entry
Yes
No
4
5
Account Is Affected by
a Closing Entry
Yes
No
6
7
After Closing Entries
Are Posted, Account
Has a Balance
Yes
No
1. Advertising Expense
2. Accts. Pay.--Baer Supplies
3. Cash
4. Accts. Pay.--Gates Office Supplies
5. Alisha Downs, Capital
6. Alisha Downs, Drawing
7. Income Summary
8. Insurance Expense
9. Miscellaneous Expense
10. Prepaid Insurance
11. Rent Expense
12. Sales
13. Supplies
14. Supplies Expense
15. Utilities Expense
3. Why is the post-closing trial balance prepared?
4. Why do only the balances of permanent accounts appear on the post-closing trial balance?
5. Journalize adjusting and closing entries using the information from the worksheet on the previous
page.
General Journal
Date
Account Title
Doc.
No.
Post.
Ref.
Debit
Credit
Standard 7: Students will demonstrate proper cash management. (Chapter 5)
1. Define and show an example of a blank endorsement.
2. Define and show an example of a restrictive endorsement.
3. What are the steps for preparing a bank reconciliation?
4. Using the information below, calculate the adjusted checkbook balance:
Balance on last unused check stub is $3,000; outstanding deposits of $400, bank service charge of
$25, outstanding checks totaling $450, and a dishonored check for $75. What is the adjusted
checkbook balance after the bank reconciliation is prepared?
5. Using the information below, calculate the adjusted bank balance:
Bank statement balance is $5,000; outstanding deposits of $150, bank service charge of $30, and
outstanding checks totaling $600. What is the adjusted bank balance after the bank reconciliation
is prepared?
6. Which accounts are affected when journalizing a bank service charge?
Debit:
Credit:
7. Which accounts are affected when journalizing a dishonored/NSF check?
Debit:
8. What does it mean to “prove cash”?
Credit:
9. Why is it important for a company to establish a petty cash fund?
10. What accounts are affected when establishing a petty cash fund?
Debit:
Credit:
11. What accounts are affected when replenishing a petty cash fund?
Debit:
Credit:
12. Journalize entries to replenishing a petty cash fund
KeepClean replenished petty cash on the dates shown in Column 2 of the following table. The
information in Columns 3 to 5 is obtained from the petty cash reports.
Record the journal entry for each petty cash replenishment.
1
2
Trans./Doc. No.
Replenished on
A / C43
B / C54
C / C67
D / C79
3
July 31
August 31
September 30
October 31
Supplies
32.00
21.00
40.00
10.00
4
Summary of Petty Cash Slips
Advertising
25.00
20.00
20.00
5
Miscellaneous
5.00
15.00
20.00
General Journal
Date
Account Title
Doc.
No.
Post.
Ref.
Debit
Credit