ACCOUNTING 1110 – FINAL REVIEW Chapter 1 – Introduction to Accounting Accounting Equation Four financial statements, types of accounts included in each (asset, liability, capital, revenue, expenses), purpose of statement and does the statement cover a period of time or a specific point in time Groups that set accounting principles Cost Principle Calculating owner’s equity (capital account balance) Pg. 12 Pg. 17
Pg. 9 Pg. 9 Pg. 18
Chapter 2 – Analyzing and Recording Transactions General Ledger (definition) Pg. 49 Analyzing and Recording Transactions Pg. 54 – Exhibit 2.7 Chapter 3 – Adjusting Entries Adjusting Entries for: Office Supplies/Office Supplies Expense Prepaid Insurance/Insurance Expense Unearned Revenue/Revenue Equipment Depreciation Expense/Accum. Depreciation Salaries Expense/Salaries Payable Types of accounts affected by adjusting entries Calculating amounts for adjusting entries (how much prepaid insurance has been used – value of remaining office supplies, etc.) Effects of not making adjusting entries for accrued revenues and expenses (understating/overstating net income) Future payment of accrued expenses such as Salaries Payable Handout Pg. 96 Pg. 95 Pg. 99 Pg. 97 Pg. 100 Pg. 94
Pgs. 100-101 Pg. 100
Chapter 4 – Closing Entries – Finishing the Accounting Cycle Reasons/purposes for closing entries Pg. 141 Closing Entries Pg. 142 (top right gold box) 1. Debit Revenue – Credit Income Summary 2. Debit Income Summary – Credit Expenses 3. Close Income Summary into Capital
Net Income = Debit Income Summary – Credit Capital Net Loss = Debit Capital – Credit Income Summary
4. Debit Capital – Credit Withdrawals Steps in Accounting Cycle Current Ratio – what it measures, how to calculate it (formula), how to interpret Chapter 5 – Buying and Selling Merchandise Merchandise inventory – definition Journal Entries: Purchase of inventory for credit Returning merchandise bought on credit Payment of amount due (less discount for paying within a certain
time)
Pg. 144 Pg. 147-148
Pg. 179 Pg. 182 Pg. 183 Pg. 182 Pg. 185 Pg. 188
Sale of merchandise on credit Inventory Shrinkage
Net Sales, Gross Profit, Net Income Acid Test/Quick Ratio – what it measures, how to calculate (formula), how to interpret Gross Margin Ratio – how to calculate (formula)
Pg. 191 Pg. 193 Pg. 193
Chapter 6 – FIFO, LIFO, Lower of Cost or Maret Purpose of taking a physical count of inventory Pg. 225 Calculate ending inventory cost using FIFO and LIFO Pgs. 229-230 Affects of inventory valuation method on net income Pg. 232 (4 bullets at top) Consistency Principle Pg. 232 Calculating Lower of Cost or Market Pg. 233-234
Chapter 7 – Special Journals Purpose of Sales Journal Purpose of Cash Receipts Journal and posting from Cash Receipts Journal to Ledger Accounts and Subsidiary Ledger Purpose of Purchases Journal Purpose of Cash Disbursements Journal General Journal Transactions with special journals
Pg. 271 Pg. 275 Pg. 277 Pg. 278 Pg. 280
Chapter 8 – Petty Cash and Bank Reconciliation Journal entries to replenish Petty Cash account Pg. 322 Bank reconciliation example Pg. 327 Book Balance – Bank Statement Balance – what to add/deduct from each balance
Test: 30
Multiple Choice/True False (only a few True/False) questions
Problems: Record adjusting entries in a general journal Record closing entries in a general journal Prepare journal entries to record purchase of inventory, return of inventory, and payment of amount due (less discount) Looking at a trial balance after adjustments have been made calculate: net sales, gross profit, gross margin ratio, net income, capital account balance, current ratio, total assets, total liabilities and owner’s equity Calculate cost of ending inventory using FIFO and LIFO Calculate Lower of Cost or Market for 4 products Match transactions to special journals Post amounts in a cash receipts journal to appropriate ledger accounts Prepare a bank reconciliation Identify steps in the accounting cycle