Mode 9 · Teach It Back

If you can explain it simply, you really know it. Write your answer, then check it against the model answer. Your self score counts at half weight toward mastery.

• S1 · Accounting equation

  Explain to a 10 year old why assets always equal liabilities plus equity.

• S1 · Accounting equation

  Explain how you'd find liabilities if you know assets and equity, including when equity is in parentheses.

• S2 · Equity roll forward

  Explain to a 10 year old the four things that change equity during a year.

• S2 · Equity roll forward

  Explain how to find net income if you know beginning and ending equity, stock issued, and dividends.

• S3 · Classification

  Explain the difference between the balance sheet and the income statement.

• S3 · Classification

  Explain why Prepaid Advertising and Advertising Expense go on different statements.

• S4 · Equity effects

  Explain why buying equipment with cash doesn't change equity.

• S4 · Equity effects

  Explain why paying dividends lowers equity but isn't an expense.

• S5 · Accrual vs cash

  Explain to a 10 year old why revenue counts when the work is done, not when cash comes in.

• S5 · Accrual vs cash

  Explain why a company with $242 million of retained earnings might not have $242 million in cash.

• S6 · FSET

  Explain how one FSET row stays balanced when you do work for cash.

• S6 · FSET

  Explain why expenses are typed as positive numbers in the FSET Expenses column.

• S7 · Journal entries

  Explain DEA LER to a 10 year old.

• S7 · Journal entries

  Explain how to write the entry for paying a supplier you owe.

• S8 · T accounts

  Explain how to find the balance of a T account.

• S8 · T accounts

  Explain what a normal balance is and give two examples.

• S9 · Adjusting entries

  Explain to a 10 year old why unearned revenue is a liability.

• S9 · Adjusting entries

  Explain the four types of adjusting entries and why none of them touch cash.

• S10 · Bucket rule

  Explain the bucket rule with a bucket of toys.

• S10 · Bucket rule

  Explain how to find cost of goods sold from inventory numbers.

• S11 · Ratios

  Explain why ROE uses average equity but debt to equity uses ending equity.

• S11 · Ratios

  Explain what the current ratio and working capital tell you.

• S11 · Ratios

  Explain times interest earned and asset turnover in plain words.

• S11 · Ratios

  Explain how to compute a percent change between two years.

• S12 · Percentage of completion

  Explain the percentage of completion method to a 10 year old.

• S12 · Percentage of completion

  Explain what to do when the problem gives estimated gross profit instead of total costs.

• S13 · Receivables & bad debts

  Explain why a company records an allowance for bad debts before anyone fails to pay.

• S13 · Receivables & bad debts

  Explain how to find bad debt expense using an aging schedule.