What are the significant differences between the FASB and its predecessor, the
What is the process the FASB follows to develop new accounting standards?
How does politics impact the standard setting process:
Why is a conceptual framework useful/necessary?
What is the primary objective of accounting?
Identify the primary and secondary qualitative characteristics of accounting.
What are the components of the primary characteristics?
Define the basic elements of financial statements (assets, liabilities, owners
equity, revenues, expenses)
Define the basic assumptions of accounting.
Define the basic principles of accounting.
What are the 4 constraints that affect financial reporting?
Identify the steps in the accounting cycle
Record transactions in the journal and be able to adjust account balance to reflect
Explain the reasons adjusting entries are necessary.
Prepare adjusting entries and be able to adjust account balances to reflect the
Prepare closing entries and be able to adjust account balances to reflect these
Be able to adjust inventory accounts at year-end using the periodic inventory
Explain the difference between a periodic and a perpetual inventory system
Be able to calculate the following cash flows:
o Cash provided by sales
o Cash paid for expenses
o Cash paid for prepaid items
o Cash paid for purchases of inventory
Explain the weaknesses of the income statement
Prepare a single step income statement
Prepare a multiple step income statement
Show the presentation of extraordinary items on an income statement, including
the use of intraperiod tax allocation and per share data
Show the presentation of discontinued operations on an income statement,
including the use of intraperiod tax allocation and per share data
Calculate earnings per share
Explain the weaknesses of the Balance Sheet
Describe the major sections of the balance sheet, including examples of accounts
that would appear in each section
Prepare a classified balance sheet
Describe the purpose of the Statement of Cash Flows
Know the format of the Statement of Cash Flows
Identify the three classifications of cash flows presented in the statement and be
able to give an example of a cash flow that would be classified in each of the
Identify the two techniques that may be used to prepare the Statement of Cash
Explain the relationship between the beginning cash balance, the ending cash
balance, and the Statement of Cash Flows
Understand that depreciation is NOT a source of cash
Be able to calculate the current ratio, the quick, or acid test ratio, and EPS.
Calculate the cash proceeds of a bond issue
Define interest in terms of cash flows
Define cash and cash equivalents
Define Receivables, and differentiate between notes receivable and accounts
Be able to prepare the adjusting journal entry for accounts receivable using
o Balance Sheet Method
o Income Statement Method
Define Net Realizable Value
Explain the impact on the balance sheet and the income statement when an
account is written off using the allowance method
Identify components of the Allowance for Bad Debts
Record the entry to recognize a Note Receivable
Record the adjusting entries to accrue interest
Calculate present value of a note receivable when the stated interest rate is not a
Explain the difference between perpetual and periodic inventory systems
Understand the components of cost to be included in inventory – freight, returns,
Calculate EI and COGS under the following assumptions:
Explain the strengths and weaknesses of LIFO, FIFO, and weighted average,
including the impact on the income statement and balance sheet associated with the
Explain what is meant by ―dipping into a LIFO layer‖
Explain the term ―phantom inventory profits‖
Use DV-LIFO to value inventories
Explain the effect of an inventory error on the income statement and balance sheet
both in the y ear the error first occurred and in subsequent years
Describe and apply LCM with respect to inventories
Explain the rationale for writing inventories down for a decline in market value, but
not writing them up for an increase in value
Define purchase commitments
Use the gross profit (gross margin) method to estimate ending inventory
Use the retail method to estimate ending inventory
o Average Cost
o FIFO – LCM
o Average Cost – LCM (conventional retail method)
Understand the components of cost to be included in asset valuation (as opposed to
current period expense)
Explain the impact on the balance sheet and income statement for the treatment of
costs with respect to asset valuation and current expense
Explain the rationale for capitalizing interest on certain constructed assets
o What is a qualifying asset?
o Calculate Accumulated Average Expenditure
o Calculate Avoidable Interest
o Calculate Actual Interest
o Prepare the journal entry to record interest
Prepare journal entries for disposal of an asset
o Trade-in of dissimilar assets
o Trade-in of similar assets
What is meant by capital maintenance?
What is the purpose of depreciation?
Does depreciation provide cash?
Be able to apply the major depreciation methods, including straight line, sum of the
years’ digits, double declining balance, and production methods including units of
output or hours of use. This includes being able to prepare journal entries to record
depreciation, as well as an understanding of book value and financial statement
How do we account for depreciation when there has been a change in estimate, such
as determining the computer system will have a shorter life than initially estimated?
What is the nature of intangible assets?
Why do intangible assets present a difficult problem for accounting?
Be able to identify different classes of intangible assets
Be able to identify costs that would appear on the balance sheet for intangible assets
Be able to prepare journal entries for amortization of intangible assets
Amortization of Goodwill
Impairments of goodwill
Defining goodwill – from a conceptual perspective, and from a measurement
Research and Development Costs—FAS No. 2
Software Development Costs—FAS No. 86
Define revenue recognition and discuss guidelines for revenue recognition
What are the special issues with revenue recognition when buyback agreements or
right of return exist
What is meant by channel stuffing?
Accounting for long-term contracts
o Percentage of Completion
o Completed contract
o Installment sales
Briefly explain current trends in Financial Disclosure
Be able to describe Regulation FD
Be able to describe Regulation G.
Define Subsequent events. Differentiate between the types of events that require
journal entries and events that only require disclosure.
Explain the general content in the Management MD&A
Comment on strengths and weaknesses of segmental reporting
Be able to calculate the following ratios:
o Current ratio
o Acid-test ratio
o Profit margin on sales
o Rate of return on assets
o Earnings per share