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Bonus Questions
Complete today’s bonus questions during the available class-day window.
Each correct answer counts toward the 20-point course bonus.
Bonus questions are available from 9:00 a.m. to 12:30 p.m. on class days.
You may edit your responses during that time.
The quiz link is active only during the scheduled class-day window.
Class 1
Podcast
Take a few minutes to revisit the big ideas from class. Then try the five practice questions below to see what stuck.
Quick Practice
These questions are just for practice. Choose your answer before opening Check your answer.
1. A potential investor wants to know how successfully a company operated during the month. Which financial statement would be the best place to start?
A. Balance Sheet
B. Income Statement
C. Statement of Retained Earnings
D. Statement of Cash Flows
Check your answer
Answer: B. Income Statement
The Income Statement reports revenues minus expenses for a period of time, which tells users whether the company generated net income or a net loss during that period.
2. A company begins the month with $0 of Retained Earnings. During the month, it earns $12,000 of revenues, incurs $10,000 of expenses, and pays $1,000 in dividends. What is ending Retained Earnings?
A. $1,000
B. $2,000
C. $11,000
D. $21,000
Check your answer
Answer: A. $1,000
First calculate Net Income: $12,000 − $10,000 = $2,000. Then calculate ending Retained Earnings: $0 + $2,000 − $1,000 = $1,000. This is one example of how information flows from one financial statement to another.
3. A company reports total assets of $36,000 and total liabilities of $25,000. Based on the basic accounting equation, what is total Stockholders' Equity?
A. $11,000
B. $25,000
C. $36,000
D. $61,000
Check your answer
Answer: A. $11,000
The basic accounting equation is Assets = Liabilities + Stockholders' Equity. Therefore, Stockholders' Equity = $36,000 − $25,000 = $11,000.
4. A company borrows $20,000 from a bank and receives the cash. On the Statement of Cash Flows, how should this cash receipt be classified?
A. Operating activity
B. Investing activity
C. Financing activity
D. Revenue activity
Check your answer
Answer: C. Financing activity
Financing activities involve transactions with creditors and stockholders that provide financing to the business. Borrowing cash from a bank is therefore a financing activity.
5. A company reports positive Net Income for the month. Which statement about its cash is correct?
A. Cash must have increased by exactly the amount of Net Income.
B. Cash must be greater than the company's liabilities.
C. Cash may have increased or decreased during the month.
D. Cash must equal the company's Retained Earnings.
Check your answer
Answer: C. Cash may have increased or decreased during the month.
Net Income is not necessarily equal to the change in cash. Revenues are reported when earned and expenses when incurred, regardless of when the related cash is received or paid. The Statement of Cash Flows separately explains why the cash balance changed.
How did you do? If one of these felt shaky, go back to that part of the podcast or your class materials and try the question again.