Midterm Study Guide
Midterm Study Guide BUS-A100
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This 4 page Study Guide was uploaded by Natasha Harvey on Tuesday February 3, 2015. The Study Guide belongs to BUS-A100 at Indiana University taught by Vivian Winston in Spring2015. Since its upload, it has received 518 views. For similar materials see Basic Accounting Skills in Business at Indiana University.
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Date Created: 02/03/15
EQ Professor hinted that this would be an exam question Midterm Study Guide 0 Balance Sheet 0 Assets Current assets 0 Cash 0 Accounts receivable 0 Inventory Shortterm investments going to be sold within one year Prepaid expire as time goes on Fixed assets expected to last longer than one year 0 Equipment 0 Buildings 0 Land 0 Liabilities Current liabilities Accounts payable Wages payable 0 Utilities payable Shortterm notes payable Longterm liabilities Notes payable not due within the next year Bonds payable 0 Stockholders Equity Common stock Retained earnings 0 Income Statement Revenue Expenses Net Income 0 Statement of Retained Earnings Beginning retained earnings Net Income Dividends Ending retained earnings 0 Ratio Analysis o Pro tability quotReturn on equity Net Income Average Stockholders o Leverage quotDebttoequity l Averaqe total liabilities Average Stockholders o Solvency quotCurrent ratio Current Assets Current liabilities 0 Asset turnover quotInventory turnover ratio I COGS Average Inventory Average inventory beginning inv ending inv2 EQ Professor hinted that this would be an exam question 0 Other ratios quotEarnings per sharequot Net Income of shares outstanding Most important of all ratios 0 Equity Investors Owners of the company 0 Don t pay interest 0 Stockholders Debt Investors o Creditors of the business 0 Expect principal and interest payments 0 Business Activities 0 Financing 0 Inves ng 0 Operations 0 Big 4 Accounting Firms EQ o PricewaterhouseCoopers PwC o Deloitte o Ernst amp Young 0 KPMG Securities amp Exchange Commission SEC 0 Established in 1933 Great Depression 0 Requires of public companies Form 10K annually Form 10Q quarterly Audited nancial statements annually by an quotindependent auditorquot Generally Accepted Accounting Principles GAAP 0 US companies must use 0 The responsibility of the Financial Accounting Standards Board FASB EQ 0 International Financial Reporting Standards IFRS much younger than GAAP o The responsibility of the International Accounting Standards Board IASB EQ 0 According to GAAP and IFRS every company must present four nancial statements 0 Balance Sheet 0 Income Statement 0 Statement of Retained Earnings 0 Statement of Cash Flows Income Statement Revenue Cost of Goods Sold Gross Pro t EQ Professor hinted that this would be an exam question All other expenses Net income from operations Gain or loss on sale of investment assets Net income 0 Statement of Cash Flows 0 Operating Interest Cash Inventory Insurance Payment of Accounts Payable Wages Collection of Accounts Receivable Building Rent Unearned Revenue Utilities 0 InvesUng Land amp Land Sale Equipment Buildings 0 Financing 0 Other Common Stock Notes Payable Dividends 0 quotNet carrying value of equipmentquot The purchase price of the equipment minus any accumulated depreciation o If it says that a company started the year with a certain amount of total assets those are the beginning retained earnings 0 Revenues The amount of cash collected from customers less beginning accounts receivable plus ending accounts receivable o Unearned Revenue An operating cash in ow when the cash is received The unearned revenue account is increased when the cash is received There is no change to the cash account when the unearned revenue is earned Total assets are not changed Unearned revenue is a liability Liabilities decrease and revenue increases when it is earned EQ Professor hinted that this would be an exam question 0 Interest expense is just the amount of interest that you are paying 0 To nd how much a company paid for insurance during a year add the insurance expense prepaid insurance beginning prepaid insurance 0 Depreciation Is to charge against revenue a portion of the original purchase price of a xed asset Equations 0 Beginning Inventory Purchased COGS Ending Inventory 0 Beginning Accounts Payable Purchased Paid Ending Accounts Payable o Assets Stockholders Equity Liabilities o Ending Stockholders Equity Beginning Stockholders Equity Net Income Dividends 0 To nd nancing cash ows 2step problem Beginning retained earnings Net income Dividends Ending retained earnings Dividends Notes payable cash ow Financing Cash Flows 0 Cost Of Goods Sold COGS Beginning inventory COGS purchased Ending Inventory COGS 0 Tips amp Tricks 0 Be careful of dates
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