Accounting 201 Final Study Guide
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
- trial balance
- adjusting entries
- adjusted trial balance
- closing entries
- post-closing trial balance
- journal entry
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?