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Mid Term Content.docx - De La Salle College


									Chapter 1: Accounting and Business

        Define: What is Accounting?
        Define: Public Accounting
        Define: Auditing
        Define: Types of Businesses
        Define: Forms of Businesses
        Define: Nature of Accounting: Routine, Period, Miscl
        Define: The Accounting Cycle
        Define: Accounting Designations: CMA, CGA, CA
        Define: Role of the Accountant and the Accounting Clerk

Chapter 2: Balance Sheet
       Define: Financial Positon. Fundamental Accounting Equation. A – L = OE
       Classifying Assets and Liabilities and OE (Capital
       Creating the Balance Sheet:
                        Format and Purpose, $, lines, totals, order of assets and liabilities, liquidity, use
                        of ruled lines, Abbreviations, Neatness
       Assets of the Right, Liabilities and OE on the Left
       Define: Accounts Receivable, Debtor, Accounts Payable, Creditor
       Claims on the Assets: creditors Claim First
       GAAP – The business Entity Concept
       GAAP – The Continuing Principle Concept
       GAAP – The Principle of Conservatism

Chapter 3: Changes in Financial Position
       Define: What is a business transaction
       Define: Source Documents
       GAAP – The Objectivity Principle
       Using the equation analysis worksheet (note: The midterm will not have this worksheet format
       but you will utilize the theory underlying these worksheets: Determining what account a
       transaction effects and understand how a transaction causes an increase or a decrease in an
       assets, liability or OE)
       4 Steps in analyzing a transaction (pg 61)

Chapter 4: The Simple Ledger
       Defnine: Account
       Define: Ledger
       Account beginning side (Assets on the left, Liabilities and OE on the right)
       Getting opening balances off the balance sheet
       Debit = Left Side
       Credit = Right Side
       Rules for debit and credit (chart on page 84)
       Applying the rules for DR and CR to a transaction
       Using T-Accounts for transactions
       Define: Double entry Accounting System
       Calculating T-Account balances: pin totals (pencil footings)
       Interpreting the balance of an account:
       Ex: what should the balance of a cash account normally be? Cash account is an asset it should
       have a DR balance. If the balance is a CR then it is an exceptional balance. Reasons for this could
       be the account is in overdraft.
       Define: Exceptional Balance.
       Understand /Interpret exceptional balance. Examples of exceptional balance.
       Define: The Bank Account/Cash Account
       On Account (page 96):
                Purchase on Account.
                Payment on Account
                Sale on Account
                Receipt on Account.
       Know how to take a trial balance (pg 99)
       What is a ledger out of balance? An error has been made in the accounting process.
       Trial balance out of balance (pg 101):
                Locate and correct errors in both the trial balance and the T-Accounts

Chapter 5: The Expanded Ledger
       3 new types of accounts in the OE: revenue, expenses, drawings
       Purpose of the expanded ledger
       Understand the opening balance of the three new accounts:
                Drawings and Expenes:
                        DR - right side – causes a decrease the OE – “money” being taken out
                       CR – left side – casuses an increase in the OE – “money” earned
       Creating an Income statement
        The purpose of an income statement
       GAAP – Revenue Recognition Convention (page 121)
       Analysing transactions for Revenue, Expenses and Drawings and inserting them into the
       appropriate T-Account.
       Net income or Net loss – Revenue minus expenses equals Net income or Net Loss
       Equity Section Summary (page 123)
       Who uses the Income Statement (pg 129)
       Fiscal Period
       GAAP – The Time Period Concept (page 130)
       GAAP – The Matching Principle (page 130)
       Define: Chart of Accounts
       Debit and Credit Theory for the expanded ledger (page 132)
       Using the expanded ledger to create a trial balance

       Beginning Capital + Net Income – Net Loss – Drawings = Ending Capital

       Prepare/Creating a Report Form Balance Sheet (Page 138-139)
              Including the Equity Section

Chapter 6: The Journal and Source Documents
       Define: the Journal
       Using the two-column General Journal
               Date first
               Don’t repeat the year and month except at the top of the page)
               Always repeat the day
               DR entries first
               CR entries last. Always indent
               Brief description of the transaction

       Define: Journalizing
       Define: Book of Original Entry

       Transaction occurs -> Recorded in the Journal -> Entries and Transferred to Ledger

       Opening Entry from Journal (recorded off the balance sheet)

       Source Document
       Given a source document you should be able to journalize it for both the vendor and the
               Cash Sales Slip
               Sales Invoice
               Point of Sale Summaries
               Purchase Invoice
               Cheque Copies
               Cash Receipts Daily Summary
               Bank Advice

               See page 172 for a complete summary

       GAAP – The Cost Principle (page 173)

       HST: Know how HST effects the purchases and the Seller
       HST Recoverable
       HST Payable

       Know how read a transaction and calculate HST. Know how to Journal the transaction. Insert it
       into the correct account.
       Know how to journal the HST remittance transaction
       HST accounts are liability accounts and are in the liabilities section of the balance sheet

Chapter 7: Postings
       Using the balance column account (rather than a T-account)
       Opening an Account
       Define: Formal Posting
       Six Steps in Posting (page 211)
       Cross-Referencing Postings
       Correcting Errors in Postings
Forwarding (page 218)

Trial Balance Out of Balance: Four Steps (page 220 -221)

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