ACCT 2301 Study Guide

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ACCT 2301
Study Guide
Comprehensive Final Exam

Chapter 1
Purpose and objectives of Generally Accepted Accounting Principles (GAAP).
Purpose of financial reporting
Purposes of and differences between financial accounting/management accounting/tax accounting
Purposes/Authority of the Securities and Exchange Commission and the Financial Accounting Standards Board

Chapter 2
3 primary/general purpose financial statements, nature of and reporting periods/dates covered by each.
Nature of Assets, Liabilities, Equity, Revenue and Expenses.
Impact of financial transactions on individual balance sheet accounts as well as Total Assets, Liabilities and Equity.
Application of the Accounting Equation.
Underlying theories of the Cost principle, Objectivity principle, and Going-Concern assumption.
Concept of Liquidity
Computation of Net Income

Chapter 3
Nature of debits/credits, impact on assets, liabilities, equity, revenue, and expenses.
Recording journal entries.
Underlying theories of Accrual Accounting, the Matching Concept, Revenue Realization principle, and Expense Recognition rule.
Impact of Net Income on owner’s equity and individual accounts affected.
Nature of double-entry system of accounting.
Nature of Retained Earnings and the financial statement on which it appears.

Chapter 4
Purpose of adjusting entries, situations requiring and accounts that are affected by adjusting entries
Impact of adjusting entries on net income
4 Types of adjusting entries
Preparing adjusting entries
Theory of the Realization principle
Nature of “accumulated depreciation”

Chapter 5
Determining net income after adjusting journal entries have been made
Rollforward of Retained Earnings
Nature of dividends and their effect, if any, on the various financial statements
Purpose of closing entries and accounts which are affected
Preparing closing entries
Computing the working capital ratio (current ratio)

Chapter 6
Periodic versus Perpetual Inventory systems and how cost of goods sold and ending inventory are determined under each system
Computing Cost of Goods Sold, Gross Profit and the gross profit margin
Deciphering Credit Terms and calculating cash discounts
Journal entries necessary to record a sale under a perpetual inventory system

Determining the adjusted cash balance on the bank reconciliation
Nature of the Allowance for Doubtful Accounts and the financial statement on which it appears
Determining the allowance for doubtful accounts based on the balance sheet approach
Journal entry necessary to state accounts receivable at their net realizable value, given the amount of uncollectible accounts and the current balance in the allowance for doubtful accounts and the impact on the financial statements
Impact of writeoffs of Accounts Receivable on the net receivable balance.
Nature and computation of the accounts receivable turnover rate and average days outstanding

Chapter 8 – Inventory and Cost of Goods Sold