key accouting principles vol 1 5th ed chp 1.pdf - Chapter 1...

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Chapter 1
FINANCIAL STATEMENTS: PERSONAL ACCOUNTING
Assessment Questions
AS-1 LO
Define accounting and describe the purpose of accounting.
AS-2
LO
In simple terms, what are assets and liabilities?
AS-3
LO
What are revenues and expenses? Provide an example of each in your personal life.
AS-4 LO
Explain the role of the balance sheet.
1
2
3
2
LO
1 Describe the purpose of accounting
LO 2
Describe the balance sheet
LO 3
Describe the income statement
LO 4
Define an accounting period
LO 5
Explain how the accounting equation works
LO 6
Explain accrual-based accounting
LO
7 Explain how to account for debt
LO 8
Explain how to account for assets
LO 9
Explain how to account for prepaid expenses
LO 10
Define capital
LO 11
Demonstrate how double entries are recorded in
T-accounts
LEARNING OBJECTIVES
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Chapter 1 Financial Statements: Personal Accounting
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AS-5 LO 3
Explain the role of the income statement.
AS-6
LO 3
Define surplus and deficit.
AS-7
LO
What are some advantages of using monthly accounting periods in your personal balance sheet?
AS-8
LO
What is the accounting equation in personal accounting?
4
5
AS-9
LO 2 5
What is net worth?
AS-10
LO
10
What is the equation for calculating ending net worth for a period?

Chapter 1 Financial Statements: Personal Accounting
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AS-11 LO 6
When does an expense need to be recorded under accrual-based accounting? What are the three possible
timings the payment can be made for an expense?
AS-12
LO 6
Explain accrual-based accounting.
AS-13
LO 6
Briefly describe the cash-based method of accounting.
AS-14
LO 7
True or False: When you borrow money, you have more cash but your net worth decreases.
AS-15
LO 7
True or False: When you pay off a loan, your cash decreases and your net worth increases.
AS-16
LO 8
True or False: Buying an asset has no impact on net worth.

Chapter 1 Financial Statements: Personal Accounting
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AS-17 LO 9