Practice Problems
10 comprehensive practice problems with detailed step-by-step solutions to master accounting concepts.
Recording Sales Revenue with Discounts
Revenue Recognition
Practice recording a sales transaction that includes trade discounts, sales discounts, and freight terms. This problem covers revenue recognition, accounts receivable, and contra-revenue accounts.
Comparing Depreciation Methods
Depreciation
Calculate depreciation using straight-line, double-declining balance, and units of production methods. Compare the impact on financial statements across methods.
Complete Bank Reconciliation
Cash Management
Prepare a complete bank reconciliation and record necessary adjusting entries. Practice identifying reconciling items and understanding their proper treatment.
FIFO vs LIFO Inventory Costing
Inventory
Calculate cost of goods sold and ending inventory using both FIFO and LIFO methods. Analyze the impact on financial statements during rising prices.
Bond Issuance at a Discount
Long-term Liabilities
Record the issuance of bonds at a discount and prepare interest expense entries using the effective interest method. Understand why bonds sell at a discount.
Prepare an Income Statement
Financial Statements
Practice preparing a multi-step income statement from a trial balance. Calculate gross profit, operating income, and net income with proper expense classification.
Adjusting Entries: 5 Scenarios
Adjusting Entries
Practice recording adjusting entries for five common scenarios: prepaid expense, unearned revenue, accrued expense, accrued revenue, and depreciation.
Prepare a Balance Sheet
Financial Statements
Practice preparing a classified balance sheet from adjusted trial balance data. Properly classify assets, liabilities, and stockholders' equity.
Cash Flow Statement: Indirect Method
Financial Statements
Practice preparing the operating section of the cash flow statement using the indirect method. Start with net income and adjust for non-cash items and changes in working capital.
Payroll Accounting: Wages, Taxes, and Net Pay
Payroll Accounting
Practice recording complete payroll entries including gross wages, employee withholdings, employer taxes (FICA, FUTA, SUTA), and the payment of net wages.