1.

Matching term with correct definition

Account Category Definitions Which Financial Statement?
Amounts recognized when the company sells products or services to BS (a) IS (b) Equity (a) Balance sheet
A Asset
customers R Revenue (b) Income Statement
Costs of providing products and services and other business activities E Expense
L Liability (c) CS = The amount
during the current period A Asset
owners contribute
L Liability
D Dividend Distributions to stockholders, typically in the form of cash into company
D Dividend
Common
R Revenue Resources of a company CS (d) RE = Net income
Stock (c)
that is retained after
Retained
E Expense Amounts owed to creditors RE paying dividends
Earnings (d)

2. ACC 2110 - A Few Important Class Policies / Things to Remember:

Dropped Assignments: Late work: 20% on quiz, HW, Plan ahead for all exams. They can't
Professionalism Computer/Phone in class
1 quiz, 1 HW, 4 videos, 1 exam and videos. N/A for exams. be opened early or extended
Open book/note on quizzes/exams does
Exams - what you CAN use Exams - what you CAN'T use Purpose of Quiz? Assessment! Academic Integrity
NOT mean easier

3. Accounts impacted by different transactions

Transaction Account BS or IS Account BS or IS
1. Company borrows $100,000 of cash from a bank Cash increases Note Payable increases

2. Company buys a truck for $35,000 cash Truck increases Cash decreases

3. Company buys another truck for $40,000 by signing a note with the dealership for the full $40,000 Truck increases Note Payable increases

4. Company receives a rent bill for $4,000 and pays it in cash Rent Expense increases Cash decreases

5. Company receives an advertising bill for $7,000 but won't pay it for three weeks Advertising Expense increases Accounts Payable increases
6. (Reference prior transaction) Three weeks later, the company pays $2,000 of the outstanding
Accounts Payable decreases Cash decreases
advertising bill
7. Company sells $12,000 of services to a customer. Customer pays for the services in cash. Revenue increases Cash increases

8. Company sells $8,000 of services to a customer. Customer promises to pay in two weeks Revenue increases Accounts receivable increases
9. (Reference prior transaction) Two weeks later, the customer pays the company $5,000 of the total
Accounts Receivable decreases Cash increases
$8,000 they owe.
10. Company pays a $11,000 dividend to its owners Dividends increases Equity Cash decreases

11. Company received an interest bill from the bank of $1,000 and paid it immediately Interest expense increases Cash decreases

Module 1 - Day 2
4. Process to create financial statements
Step 1: Account balances after transactions Step 3: Build Financial Statements

Accounts Accounts Income Statement

Cash Notes Payable Receivable Payable
(1) 100,000 (10) (11,000) (1) 100,000 (8) 8,000 (5) 7,000 Service Revenue $ 36,000
(2) (35,000) (11) (1,000) (3) 40,000 (9) (5,000) (6) (2,000) Total Revenue 36,000
(4) (4,000) (12) (3,000) (14) (10,000) (15) 16,000 (13) 6,000
(6) (2,000) (14) (10,000) 130,000 19,000 11,000 Wage Expense 3,000
(7) 12,000 (16) 30,000 Rent Expense 4,000
(9) 5,000 Interest Interest Expense 1,000
81,000 Truck Wage Expense Expense Advertising Expense 13,000
(2) 35,000 (12) 3,000 (11) 1,000 Total Expense 21,000
12. (3) 40,000
75,000 3,000 1,000 Net Income $ 15,000 (A)

13. Service Advertising

Revenue Expense Dividends
(7) 12,000 (5) 7,000 (10) 11,000 Equity Statement
14. (8) 8,000 (13) 6,000 Common Retained
(15) 16,000 13,000 11,000 Stock Earnings Total Equity
36,000 Beginning Balance $ - $ - $ -
15. Common Issue
Rent Expense
common stock 30,000 - 30,000
Rent Expense Stock Add:
Interest
NetExpense
income - 15,000 (A) 15,000
(4) 4,000 (16) 30,000 Less:
Advertising
Dividends
Expense - (11,000) (11,000)
16. Ending Balance $ 30,000 $ 4,000 $ 34,000
4,000 30,000 (B) (C) (D)

Step 2: (1) Summarize account balances; (2) Determine account type (can only be one); (3) Balance Sheet
Determine financial statement (can only be one)
Cash 81,000
Statement

Statement
Balance
Dividend

Ending Income
Revenue

Equity
Expense

Sheet
Liability

Account Accounts Receivable 19,000

Equity
Asset

Balance
Truck 75,000
Cash 81,000 X X Total Assets 175,000
Notes Payable 130,000 X X
Accounts Receivable 19,000 X X Notes Payable 130,000
Accounts Payable 11,000 X X Accounts Payable 11,000
Truck 75,000 X X Total Liabilities 141,000
Wage Expense 3,000 X X
Interest Expense 1,000 X X Common Stock 30,000 (B)
Rent Expense 4,000 X X Retained Earnings 4,000 (C)
Don't Forget
Service Revenue 36,000 X X Total Equity 34,000 (D)
HW #'s
Advertising Expense 13,000 X X
18, 19, 20
Dividends 11,000 X X Total Liabilities + Equity 175,000
Common Stock 30,000 X X

Module 1 - Day 2