Domain1 Lesson 1 - Labs

Pre-Assessment Records value leaving an account

What is the account equation? Credit
Asset = Liabilities + Shareholders Equity
A system of making entries of equal value to
Accounts that increase when debited and both debit and credit, keeping them in
decrease when credited? constant balance
Asset, Expense and Dividends Double-entry Accounting

_____ is the income a company earns Records the value coming into an account
through the sale of goods and/or services. Debit
Revenue
Wacky Jackets took out $200 loans to
If a client is involved in an illegal situation, purchase shipping supplies. Move the dollar
the bookkeeper is only ethically responsible amount to the correct locations on the
for notifying the client if the dollar amount is T-accounts.
more than 1,000. Cash (Dr. $200 and Cr. $200)
False Loans Payable (Cr. $200)
Office Supplies (Dr. $200)
What is the estimated time an asset is
depreciated? Shows the company’s net worth at a single
Useful Life point in time
Balance Sheet
Transactions recorded in the transaction
journal are shown in which order? Summarizes the company’s revenues, cost
Date and expenses over a given period
Income Statement
Which financial statement represents a
specific point in time? Provides information about the movement of
Balance Sheet money in and out of the company during an
accounting period
Accounting assumptions are a set of rules Statement of Cash Flows
that ensure that a business’s operations are
following _______ standards. Shows any changes to the owners equity
Financial Accounting Standard Boards from the balance through the end of the
(FASB) accounting period balance.
Statement of equity
A_____ is prepared at the end of the
accounting period to ensure that credit and Drag the terms to the correct side of the
debit columns are equal. t-accounts
Trial Balance Debit (Left Side)
Credit (Right Side)
Using the double-entry method, how many
accounts are affected by a journal entry? Julie owns a salon. She withdrew $75 from
Two her company’s checking account to
purchase a new blow dryer. Sue the
Which accounting method is most double-entry accounting method to record
commonly used by small businesses? these transactions.
Cash basis Cash ($75, Credit)
Equipment ($75, Debit)
Double-entry accounting software only
allows transactions with equal credit and
debit entries to be saved.
True
Lesson 2 - Labs Domain 1 - Post-Assessment
Companies should continually deliver :include all lesson 1 and 2 labs.
business operations for an extended period
Going Concern How would adding an adjustment journal
entry that debits the expense account affect
Business financials should be kept separate the company’s equity?
from the personal financials The company's equity would decrease.
Economic Entity
The amusement park owner recently
Every transaction recorded must expressed declared bankruptcy and has publicly
in monetary terms announced that the park will close
Money Measurement permanently. The company’s bookkeeper
has had friends and community members
A company’s account practices and reach out wanting to know why the park is
methods must be reported and maintained closing. How should the bookkeeper
for a set period of time to make financial respond to the inquiries about closure?
statements easier to read and compare They should not share any information
Time Period about the closure with anyone.

Companies should only record accounting Which accounting assumptions suggest that
transactions to their financial statement that business transactions should never be
can be verified mixed with personal transactions?
Reliability Economic Entity

Companies should use the same method of ______ the thing that business owns
accounting throughout all of their accounting Asset
periods.
Consistency Raymond is an accountant for a car rental
business. Raymond needs to account for
A transaction that cannot be reported on the the business’s newest car depreciation.
current income statement because it will be Which type of adjusting process should he
an expense or revenue in a future use?
accounting period. Non-cash expense
Deferrals
Choose two reasons a bookkeeper can
An expense or revenue that must be disclose information about a client's
reported on the current income statement financial data.
but will be a transaction in a future If a judge issue a subpoena
accounting period. If the client has given consent for the
Accruals information to be shared.

Used to adjust depreciation Correy’s Carpet completed a carpet

Non-cash expenses cleaning service on January 1 and will be
replacing the carpet in two of the clients
Steps: rooms in March. The client will pay for the
1. Analyze business transactions cleaning when the entire job is completed.
2. Journal Entries Which type of adjustment should be used
3. Posting to the general ledger for this scenario?
4. Trial Balance Accruals

1. Journalize Earned Interest is recorded as revenue

2. Post adjusting entries True
3. Financial Statements
4. Closing the books At the end of the accounting period, Brenda
prepares a trial balance. What does she
need to complete before preparing the
company’s financial statement?
Make adjusting entries
Which of the following are liabilities? Domain 2
Choose three (3) answers. Pre-Assessment
Taxes, Employees Wages and Bank Debt Which portion of the accounting equation
does merchandise inventory affect?
_____ accounting records revenue when it Assets
is earned, whether the money has changed
hands or not. Notes Receivable are assets to a business?
Accrual True

Computer Pros sent their client an invoice On which financial statement is depreciation
for $150 for the computer repair they reported?
provided last week. After the payment is Income Statement
received, it is recorded as revenue. Which
type of accounting method does Computer Which term refers to a company’s loss of
Pros use? inventory?
Cash Basis Shrinkage

Two characteristics of general ledger Which type of convertible asset is intended

Display the balance of each account in the to be used for more than 12 months?
chart of accounts. Long-term asset
Displays debits and credits for each account
in the chart of accounts during the time The ___ inventory valuation method uses
period. the item's average cost throughout the year
as the value of each unsold inventory unit.
Which account increases when credited and WAC
decreases when debited? Choose three (3)
answers. Harvey’s Book Store made a cash sale of
Revenue, Liabilities and Equity $55 when a customer purchased two books.
Which accounts are affected by this
____ is the actual cost when a company transaction?
purchases an asset. The cash account is debited $55, and the
Historical Cost merchandise sale is credited $55.

When a company franchises their business,

they make ____ income.
Royalty

Which is the balance of money that has not

been paid but is expected from customers?
Accounts Receivable

Which are assets? Choose two (2) answers.

Equipment and Saving Account

Merchandise inventory is a(n) ____ asset.

Current

Which method of depreciation equally

divides the depreciation of an asset over its
useful life?
Straight-line
Lesson 1 - Lab You are the bookkeeper for an appliance
You are the bookkeeper for a hardware company that uses the FIFO inventory
store. Fifty drills were sold this quarter. valuation method. Use the table to
Using the table and the LIFO Inventory determine the cost of goods sold for 275
valuation method , calculated the value of speakers.
the unsold inventory.

Solution
100 x 50 = 5000
Solution:
150 x 55 = 8250
60 x 90 = 5400
25 x 70 = 1750
20 x 115 = 2300
5000 + 8250 + 1750 = 15000
5400 + 2300 = 7,700

Marci sold an $800 wedding dress to a

You are the bookkeeper for a tech company
customer today. The customer paid in cash.
that uses the FIFO inventory valuation
Drag the dollar amount to the chart in the
method. In April, the company sold 200
correct locations to record this transaction.
wireless headphones. Use the table to
Cash $800 (Debited)
determine the cost of the remaining 100
Sales Revenue $800 (Credited)
wireless headphones.

Howard is the bookkeeper for the

convenience store. The convenience store
completed a physical inventory at the end of
the year. The beginning inventory was
$35,000; however, the count taken was
Solution: $33,000. Account for shrinkage.
50 x 45 = 2250 Cost of Good Sold $200 (Debited)
50 x 50 = 2500 Merchandise Inventory $200 (Credited)
2250 + 2500 = 4750

The assumption that the first inventory item Lesson 2 - Lab

sold will be subtracted from the first items An accelerated method that results in higher
that entered the warehouse. depreciation expenses during the beginning
FIFO (First In, First Out) years and lower expenses during the
beginning years and lower expenses during
Use the average cost of items during the the later years of the asset’s useful life.
year to compute the value of unsold Declining balance depreciation
inventory.
WAC (Weighted Average Cost) The years an asset is expected to be
inservice and depreciate
The assumption that the last items to enter Useful Life
the warehouse are the first items to leave
the warehouse. A method that spreads the asses
LIFO (Last In, First Out) depreciations equally over its useful life
Straight-line Depreciation
Clean Ducts LLC conducted an air duct
cleaning service last week and just Another word for the useful life or time that
received payment for the $450 invoice that an asset will be used by a company.
was sent out. Drag the dollar amount to the Service Life
chart to record this transaction.
Cash $450 (Debited)
Accounts Receivable $450 (Credited)
Post-Assessment bank account. Which accounts are affected
:include all lesson 1 and 2 labs. by this transaction?
The PPE account is debited 86,000, the
Bonnie’s bakery purchased a new industrial cash account is debited $4,000 and the
oven with cash to keep up with the supply liabilities account is credited $90,000
demands of its growing bakery. Which two
accounts are affected by this purchase in An accountant would credit the expense
the accounting equation? account to report depreciation.
Two different assets False

An appliance store purchased $20,000 Examples of current assets? Choose two

worth of washing machines to sell to its (2) answers.
customers. The washing machines were Inventory and Accounts Receivable
purchased using the company credit card.
Which accounts are affected by this Pet world sold its industrial snow plow for
transaction? $600 after deciding to outsource snow
The asset account is debited $20,000 and removal next year. Which account(s) are
the liabilities account is credited $20,000. affected by this transaction.
Shareholders equity and asset
Which account has a natural debit balance?
Choose Two (2) answers
Expense and Asset account

Electronics World sent an invoice to a

customer for last month’s home security
system installation. They received a $250
payment from the customer. Which
accounts are affected by this transaction?
The cash account is debited $250 and the
accounts receivable account is credited
$250.

Which legally binding agreement states that

a business is owed money and outlines
when they should receive the payment?
Promissory Note

Which type of merchandise inventory would

a car mechanic shop have?
Motor Oil

Which accounts have a natural credit

balance. Choose three (3) answers.
Revenue, Owners Equity and Liability.

Which are the examples of long term

assets? Choose two (2) answers.
Equipment and Computers.

Which type of merchandise inventory would

a print shop have?
Paper

Lue’s Limousine Services received a

$90,000 loan from the bank to purchase a
used limousine. $86,000 was used to
purchase the limousine, and the remaining
$4,000 was deposited into the company’s
Domain 3 Lesson 1 - Lab
Pre-Assessment An exchange of physical money as payment
After a company’s profit is used as the for goods and services
equity account’s opening balance within Cash Payment
accounting software, to which account
should the funds be moved? The cost of buying inventory with the intent
Retained Earnings to sell it to customers.
Purchases
Which accounts are equity accounts?
Choose three (3) answers. Goods and services exchanged between a
Retained earning, common stocks and customer and seller without immediate
dividends payment
Credit Purchase
Which are types of payroll withholdings?
Choose two (2) answers. A location that represents the money a
FICA and State Taxes company owes its creditors.
Accounts Payable
HogDogz owner Ralph drew on its owner’s
equity to purchase a new ATV for his family Total amount money paid out to employees
vacation. How is the accounting equation Deposits
affected by this transaction?
The equity account is decreased because A document containing an employee's pay
the assets account is decreased rate, hours worked, accrued overtime, tax
withholdings and vacation time.
Diamond Shores Constructions took out a Payroll Report
$30,000 loan last year. They paid $20,000
of the loan back and have $10,000 Money taken out of an employee’s
remaining to pay this year. What is the paycheck to pay income taxes for the pay
remaining loan amount classified as on the period
balance sheet? Withholdings
Long-Term Liability
A nine-digit number assigned to a company
Which Tax form allows an employee to to identify it during the tax process.
determine their paycheck tax withholding? EIN
W-4
Employee's withholding allowance
Which amounts are affected by a payroll certificate
transaction? W-4
Asset, Liabilities and Equity
Request for Taxpayer Identification Number
The employee's earning record is prepared and Certification Form
before the payroll register? W-9
True
Employee Wage Report Form
Liabilities have a natural debit account W-2
balance.
False

Which account represents the money a

company owes its creditors?
Accounts Payable
Lesson 2 - Lab Post-Assessment
Quilt Corner took out an $18,000 loan from :include all lesson 1 and 2 labs.
the bank to purchase a new longarm quilting
machine. To record how this transaction Which tax form is used to report an
affects the accounting equation drag the independent contractor’s non-salary
dollar amount to the correct location on the income to the IRS?
T-charts 1099
Assets $18,000 (debited)
Liabilities $18,000 (credited) Which payroll item reflects the amount of
money an employee earns before taxes and
A representation of the owner’s initial deductions are withheld?
investment into the ownership of a business Gross pay
Common stock
Which is a strong indicator that a company
Income and unrealized income may default on its debt?
Other Comprehensive Income The interest payable amount is larger than
the loan
A share that guarantees cumulative
dividends Ruth purchased eight new handbags for
Preferred Stock $360 in cash to sell at her clothing store.
How should this purchase be recorded in
The portion of a company’s net income that the books?
was not used to pay dividends to Debit the Purchases account $360 and
shareholders credit the cash account $360
Retained Earnings
Which are the current liabilities? Choose
Common Stock a company has purchased two answers.
back from its investors Credit Card balance and Wages
Treasury Stock
Which are long-term liabilities? Choose two
Distributions of profit to shareholders, which answers.
reduces a company’s equity Bonds and Car Payments
Dividends
Julie purchased a $3,000 asset with cah.
An investor’s payment for the stock over its How does this purchase affect the balance
par value. of the accounting equation?
Contributed Surplus There would be no effect on the balance of
the accounting equation

Marco purchased a holiday collection of

greeting cards for $60 cash to sell at his
copy and print store. How should this
transaction be recorded?
Debit the purchase account $60 and credit
the cash account $60.

How are retained earnings calculated?

Retained earnings = retained earning
beginning balance + net profit or loss -
dividends paid.

The employee's earning record is prepared

for each pay period.
False

What tax form is used by an employee to

report their income to the IRS?
W-2
Which liabilities must be paid within a Domain 4
normal operating cycle? Choose two Pre-Assessment
answers. COGS is used to calculate a company’s
Taxes Payable and Interest Payable ____ and gross profit margin.
Gross Profit
What are the differences between current
and long term liabilities? A(n) ____ helps a bookkeeper to see
Current liabilities are debts payable within changes in a company's financial condition
one year, and long term liabilities are debts over time.
requiring longer than one year to pay. Month-over-month income statement

Where do liabilities appear on the balance Checks that have not cleared still appear on
sheet? the bank’s balance.
After Assets False

Which are types of payroll deductions? A financially healthy company has more
Choose three (3) answers? assets than liabilities.
Life insurance, Garnishments and True
Retirement
Which is the balance of the cash account in
a general ledger as of a specific date?
Book Balance

Which reconciliation document helps a

company validate the gross value of an
asset?
Fixed Asset Schedule

Companies use reconciliation to help

prevent errors on their ___.
Financial Statement

The budget portion of the Budget vs. Actual

report reflects the company’s revenue and
expenses at a specific time.
False
Lesson 1 - Lab Lesson 2 - Lab
Steps: Refer to the image. How much was
1. Enter the transactions up to the Diamond Shores Construction over or under
reconciliation date. budget on its advertising expenses in
2. Carefully go over the bank statement and August 2021.
match the transactions with the transactions
recorded in the book.
3. Enter the missing transactions found on
the bank statement into the books.
4. Research the unreconciled transactions
and make the appropriate corrections by
adjusting entries.
5. Mark the reconciliation process complete
6. Close the accounting period

A check not paid by the bank but reconciled

in the books
Outstanding
Under $25
A deposit recorded in the books but not
reported by the bank in the same period Refer to the image. Which Diamond Shores
In-transit Constructions income account were closest
To meet the budget.?
A charge by the bank against the account
as a result of a bounced check.
NSF Check

Money earned on the money held in the

bank
Bank Interest

A list of unpaid invoices

Vendor Statement

Defines company’s gross cost, depreciation,

fixed assets and current book value.
Fixed asset schedule

A table that helps a company see how much Demo income

of each payment goes toward principal and
interest and the remaining owed.
Amortization Schedule
Post-Assessment What does the % of the Budget column on
:include all lesson 1 and 2 labs. the budget vs actual report reflect?
How close the company came to its
Which document helps a company ensure budgeted goal as percentage
that they have been charged the correct
amount for the product or service received. What are check called when the issuer does
Vendor Statement not have the funds to cover the check
amount
Services charges and ____ are recorded in NSF Check
a company’s books at the end of the month
from bank statement
Interest Earned

In which order are items listed on the

balance sheet?
Asset, Liabilities and Equity

Transposed numbers are divisible by ___.

9

Which reconciliation document help a

company see how much of a payment goes
toward interest?
Amortization schedule

Which type of comparative income

statement provides a complete picture of a
company’s trends
A comparative income statement broken
down by month

How are liabilities listed on the balance

sheet?
In the order they are expected to be paid

Account reconciliation is typically performed

on which account?
Asset, Liability and Equity Accounts

A(n) _____ combines information from two

or more income statements with the ost
recent period listed first.
Comparative Income Statement

Where are COGS listed on the income

statement?
Under Revenue

How much of a profit margin do companies

generally like to have?
10%

Which accounts are reconciled with

external sources? Choose three (3)
answers.
Loan Payable, Accounts Receivable and
Common stock