Accounting

Kenneth W. Boyd, Kate Mooney

• Publisher: For Dummies
• Year: 2015
• Print ISBN: 9781118853283
• eBook ISBN: 9781118853221
• Edition: 1
• Topic: Business
• Subtopic: Financial Accounting
• Index: Business

Get up to speed quickly—review and practice major concepts in accounting!

Whether you're looking to improve your classroom experience, or simply become more familiar with accounting concepts, 1, 001 Accounting Practice Problems For Dummies is the hands-on tool you need to get a step ahead. The book's practice questions and review content go hand-in-hand with the content offered in Accounting For Dummies, ensuring that you have a working knowledge of the most important concepts and skills in accounting.

This practical resource gives you access to tons of helpful online content, including practice problems in multiple-choice format, and customizable practice sets for self-directed study, all available on the go through your smartphone, laptop, or tablet. Practice problems are categorized as easy, medium, or hard, so you can build your knowledge at your own pace. A perfect companion for anyone looking to increase their accounting skills, this book has the added benefit of offering review and practice useful for individuals looking to pass their accounting courses and lay the groundwork for an accounting career.

• Filled with practice questions, review content, tips, and explanations for anyone interested in accounting principles
• Includes tons of online practice content, such as multiple choice questions and customizable practice sets, all available with purchase of the book
• Ideal for individuals looking to pass an accounting class or start a career in accounting
• Serves as an excellent companion resource to Accounting For Dummies

Packed with endless practice opportunities, 1, 001 Accounting Practice Problems For Dummies has everything you need to jumpstart your journey into accounting and financial documentation.

Part I

The Questions

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In this part . . .

The only way to become proficient in accounting is through a lot of practice. Fortunately, you now have 1,001 practice opportunities right in front of you. These questions cover a variety of accounting concepts and range in difficulty from easy to hard. Master these problems and you’ll be well on your way to a solid foundation in accounting concepts.

Here are the types of problems that you can expect to see:

• Elements of accounting (Chapter 1)
• Financial effect of transactions (Chapter 2)
• Bookkeeping cycle and adjusting and closing entries (Chapters 3 and 4)
• Understanding and reporting profit (Chapter 5)
• Reporting financial conditions on the balance sheet (Chapter 6)
• Coupling the income statement and balance sheet (Chapter 7)
• Reporting cash flows (Chapter 8)
• Reporting changes in stockholders’ equity (Chapter 9)
• Choosing accounting methods (Chapter 10)
• Profit behavior analysis (Chapter 11)
• Manufacturing cost accounting (Chapter 12)
• Investment analysis and financial statement analysis (Chapters 13 and 14)

Chapter 1

Elements of Accounting

Accounting is a subject that requires you to learn concepts in a specific order. That’s because concept B builds upon what you learned about concept A. In fact, an accounting student can get very frustrated trying to learn a concept by jumping ahead and not understanding earlier concepts. This chapter provides some of the critical elements of accounting. You need these concepts before moving on to any other accounting topics.

The Problems You’ll Work On

In this chapter, you see a variety of algebra problems:

• Working with transactions that change the accounting equation
• Defining assets, liabilities, equity, revenue, and expenses
• Understanding the differences between cash-basis and accrual-basis accounting
• Compiling the income statement using revenue and expense transactions
• Using the balance sheet and the income statement

What to Watch Out For

Don’t let common mistakes trip you up. Some of the following suggestions may be helpful:

• Be careful when using the accounting equation. There are two versions of the formula. One is assets – liabilities = equity. The other is assets = liabilities + equity. Keep in mind which version you’re using.
• The profit calculation using accrual accounting is unrelated to a firm’s cash position. A firm can have a very profitable month and have a very low cash position.
• To understand the statement of cash flows, identify the investment and financing transactions first. After you identify those transactions, all the other cash flows are related to operations.
• Accounts receivable and accounts payable transactions are only posted when you use accrual accounting. If a company is using the cash basis, you don’t use receivables or payables.

Types of Business Entities

1–5

1. Business entities can legally be organized in a variety of ways. What is a common characteristic among all business entity types?

2. What business type is a single-owner business?

3. Entering into a business with another person is an example of what type of business entity?

4. Why is a sole partnership not one of the ways of legally organizing a business?

5. Which business type is most difficult to create initially but, once created, makes it easier to raise funds and provides liability protection for the owners?

The Accounting Equation and Why It Balances

6–30

6. What is the proper format of the basic accounting equation?

7. What are assets?

8. What makes a vehicle purchased with a loan an example of an asset?

9. What are liabilities?

10. Why is money owed to a bank on a loan considered a liability?

11. What does it mean when a company purchases something on account?

12. Why is a loan from a bank not an asset?

13. Why is office equipment an example of an asset?

14. What is the name for resources owned by a company?

15. A business has assets of $135,000 and liabilities of $45,000. Calculate the amount of owners’ equity.

16. A business has liabilities of $345,700 and owners’ equity of $154,300. Calculate the amount of assets the company has.

17. At the end of an accounting period, a company’s total assets equaled $1,450,000, and owners’ equity was $654,000. How much were the company’s liabilities?

18. At the end of an accounting period, a company’s total assets equaled $576,000, and liabilities equaled $245,000. How much was the company’s owners’ equity?

19. At the end of an accounting period, a company’s owners’ equity equaled $2,376,000, and its liabilities equaled $142,000. How much were the company’s assets?

20. What does it mean when a business has negative retained earnings?

21. What is the effect on the accounting equation if a company buys a truck with a cash down payment of $5,000 and borrows the remaining $25,000?

22. What is the effect on the accounting equation when a company pays cash for purchases of inventory?

23. What is the effect on the accounting equation when a company obtains a loan to purchase a delivery tr...

Table of contents

• Cover
• Title Page
• Table of Contents
• Introduction
• Part I: The Questions
• Part II: The Answers
• About the Author
• Cheat Sheet
• Advertisement Page
• Connect with Dummies
• End User License Agreement