How does the accounting profession distinguish between internal and external users of financial information? Whose needs are considered to be most important in the preparation of the general purpose financial statements?
Distinguish between the three primary forms of organization for a business, i.e. proprietorships, partnership, corporations. How are corporate decisions authorized and carried out?
What is the accounting equation? Why is it important?
When are revenues recognized in an accrual base accounting system? When are expenses recognized? Name the accounting concepts that answer these questions.
What are the four financial statements? What is the purpose for each? Does each report for a period of time or for a point in time? Be able to calculate the change in stockholders’ equity for a period based on information contained in the retained earnings statement.
What is GAAP? Who is the body currently responsible for establishing GAAP? What governmental agency has oversight authority over the accounting profession?
What is an audit? What is the purpose of an independent audit? Who can perform an audit?
What is the sequence of the accounting cycle? Define the following terms related to the accounting cycle: -chart of accounts
-adjusted trial balance
-post-closing trial balance
Be familiar with account classification. What are the five major categories of accounts?
What is a contra account?
Be able to analyze transactions using the debit/credit rules.
What is a compound journal entry?
How is an account’s balance determined? What is meant by the term normal balance? Be able to calculate an account balance.
When are adjusting entries prepared? Why are they necessary? What are some rules that apply to all adjustments? Review the handout you were give regarding adjusting entries.
What do the following accounting concepts mean?
Which of the accounting concepts listed above form the basis for accrual basis accounting?
What are the three closing entries? What is the purpose of closing entries?
What is the format for a bank reconciliation? Which reconciling items require that a journal entry be made to recognize them?
Be aware of the formulas to calculate some of the commonly used financial ratios, including:
How are the following items calculated?
-cost of goods sold
What is the difference between a periodic inventory system and a perpetual inventory system?
What are internal control procedures? What are the four primary reasons for establishing internal controls? What are some common examples of internal control procedures?
Define the following terms with regard to notes receivable/notes payable: -principal
Be able to calculate ending inventory and cost of goods sold under the following inventory cost allocation methods: -average costing
-FIFO (first-in, first-out)
-LIFO (last-in, first-out)
Be able to define the following terms related to long term assets:
-residual value/salvage value/trade-in value
-service life/useful life
Be able to calculate depreciation using the following methods: -straight line
-units of production
-double declining balance
How is the cost of a group/bundled purchase of assets allocated?
What is the difference between the direct write off method and the allowance...