courses › Accounting

Loans, owner money, deposits, and collections bring cash without being sales.

In your head, jot if needed · no calculator why?

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Builds on: The Accounting Equation (not open yet)

skills · practice stats

From rounds of this course only: box, review and trial answers are left out. Once a skill has 40 tries, it compares your first 20 tries with your last 20.

• How much revenue? par 12 s not tried yet

  worked example

  The owner puts $2,100 of personal savings into the business account. Under accrual accounting, by how much does this month's revenue increase?

  Answer: $0.00

  1. Revenue comes only from earning it by delivering goods or services.
  2. Owner money raises cash and the owner's equity; the business didn't earn it.
  3. Revenue rises by $0.

• Where does the other side go? par 15 s not tried yet

  worked example

  A client's $2,200 check arrives for an invoice the business sent, and recorded as revenue, two months ago. Where does the other side of this cash go?

  1. Revenue
  2. Nothing new — it settles accounts receivable
  3. Owner's equity
  4. A liability (a loan or a customer deposit)

  Answer: Nothing new — it settles accounts receivable

  1. The sale was counted when it was invoiced. Collecting it settles the receivable; it is not a second sale.
  2. Only money earned by delivering goods or services is revenue.

• What customers still owe par 17 s not tried yet

  worked example

  Accounts receivable (money customers owe you) starts the month at $11,600. You invoice $19,300 of new work and customers pay $26,900. What is accounts receivable at month-end?

  Answer: $4,000.00

  1. Receivables = start + new invoices − collections
  2. = $11,600 + $19,300 − $26,900 = $4,000.
  3. Collections shrink receivables; they aren't new sales.

• Buying equipment: expense now? par 16 s not tried yet

  worked example

  The business pays $4,100 in cash for an espresso machine and records it as an asset. What is the change in total assets today? (Use a minus sign for a decrease.)

  Answer: $0.00

  1. Cash falls $4,100 and equipment rises $4,100: one asset swaps for another.
  2. Total assets don't change, and there is no expense yet; depreciation spreads the cost over later years.
  3. Change in total assets: $0.

rest ladder

Win 3 of your last 4 rounds and the course rests. A win is 90% right, within 2× the round's par. Pass the review when it comes back and the next rest is longer.

1. 1 day
2. 3 days
3. 7 days
4. 14 days
5. 30 days
6. 60 days
7. mastered · every 90 days

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