Comprehensive Final Exam Study Guide for Accounting Fundamentals

FINAL EXAM Study Guide Chapter 1 1. How do you calculate net income / net loss? 2. What are revenues / expenses? 3. What is an asset / liability? 4. Given a series of information, use the accounting equation A = L + SE to calculate a missing factor. 5. What information should be included in the heading of every financial statement? 6. What is US GAAP? Who created it? Chapter 2 1. Not all transactions are accounting transactions that require recording in the general ledger. Given a series of transactions, determine which transaction is NOT an accounting transaction. 2. What is a chart of accounts? 3. What impact does the collection of accounts receivable have on the accounting equation? 4. Given a series of transactions, calculate total assets at the end of the year. 5. What entries will require you to record a debit?... a credit? 6. Which side is the normal balance of an account? 7. What is the journal entry when you record supplies on account? 8. Given a series of accounts, determine what the total debit balance of those accounts is?... the total credit balance? Chapter 3 1. Given a series of transactions, determine the transaction that will increase revenue. 2. Which financial statement do expenses appear on?... liabilities? 3. Given a series of information, calculate Net Income. 4. Given a series of transactions, determine the transaction that will NOT be reported on the income statement. 5. What is the journal entry you record when you receive cash in advance of providing the service? 6. Given a series of transactions, determine the appropriate month to record the revenue… the expense. Chapter 3 (continued) 7. What is the journal entry you should record when you collect cash from an existing account receivable? 8. What is an unadjusted trial balance? Chapter 4 1. When is an accrual adjustment required?... a deferral adjustment? 2. Memorize the accrual / deferral chart in your Chapter 4 PowerPoint presentation. 3. What is depreciation expense? 4. Why would a company record an adjusting journal entry for income taxes? 5. Given a series of information, calculate Retained Earnings at the end of the year. 6. What accounts will have a zero balance on a post-closing trial balance? 7. What is the purpose of a post-closing trial balance? Chapter 6 1. Memorize the inventory formula and sales formula summaries in your Chapter 6 PowerPoint presentation. 2. Understand how to interpret credit terms, for example: 2/30, n/60. 3. Know the journal entries to record the purchase and payment of merchandise, under discount terms, gross & net methods. 4. What is the journal entry to record the return of a product by a customer?............ Debit – Sales R&A, Credit Cash or A/R Chapter 7 1. Inventory “sits” on the balance sheet until it is sold. Once it is sold, it is “transferred” to the income statement as Cost of Goods Sold. 2. What is the definition of the LIFO method? How does it calculate COGS?... the newest purchases or the oldest purchases? 3. Given a series of information, calculate the COGS and ending inventory using the FIFO method. 4. Given a series of information, calculate the COGS using the LIFO method. 5. Given a series of information, calculate the COGS using the weighted average method. Chapter 7 (continued) 6. Under what circumstances would you use the specific identification method? 7. What is inventory turnover? Chapter 8 1. What are the advantages of extending credit to customers? 2. What type of account is the Allowance for Doubtful Accounts? What does it offset? 3. What is the journal entry to record a company’s estimate of bad debt expense? Debit – Bad Debt Expense, Credit Allowance for Doubtful Accounts 4. Calculate Bad Debt Expense using the percentage of credit sales method. 5. Calculate the ending balance in the Allowance for Doubtful Accounts using the percentage of sales method. 6. Calculate the ending balance in the Allowance for Doubtful Accounts using the aging of accounts receivable method. 7. If a company lends someone money using a formal promissory note, what is the journal entry? Debit – Note Receivable, Credit – Cash 8. What type of account is interest receivable? Chapter 9 1. What are intangible assets? What are some examples of intangible assets? 2. Under the cost principle, what types of expenditures are capitalized into the cost of the asset? 3. Given a series of expenditures, determine the total cost of a land purchase. 4. Do freight costs get capitalized into the cost of a tangible asset? 5. Using the straight-line method, calculate depreciation expense for an entire year. 6. Using the straight-line method, calculate depreciation expense for a partial year. 7. What is the calculation of an asset’s book value? Chapter 10 1. What are current liabilities? What are some examples? 2. Should FICA taxes be paid by the employee, the employer, or both? 3. What type of account is Deferred Revenue? 4. What type of transaction results in a bond premium?... bond discount? Chapter 10 (continued) 5. If a company borrows money using a formal promissory note, what is the journal entry? Debit – Cash, Credit – Notes Payable 6. If a company borrows money using a bond at face value, what is the journal entry? Debit – Cash, Credit – Bonds Payable 7. What is a contingent liability? Chapter 11 1. What is an advantage of debt financing in comparison to equity financing? 2. What accounts are included in the stockholder’s equity section? 3. Memorize the common stock triangle in your Chapter 11 PowerPoint presentation. 4. What is the journal entry to record the sale of stock at an amount in excess of par 5. 6. value? Debit - Cash, Credit -Common Stock, Credit – APIC Calculate the journal entry required for a dividend declaration. What is a residual claim? General The exam is 80 multiple choice questions worth 2.5 points each. In addition to this study guide and the in-class review I conduct, there are a series of practice multiple choice questions and answers in Canvas labeled as “At-Home Review”. These questions will help you get comfortable with the format of the exam questions. Lastly, in each Canvas chapter module is a PowerPoint presentation labeled, “Extra Solved Problems”. These are also a great study tool.