New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Exam 1 Study Guide

by: Rachel Rozow

Exam 1 Study Guide MGMT 200

Marketplace > Purdue University > Business > MGMT 200 > Exam 1 Study Guide
Rachel Rozow

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

This study guide covers the past five weeks of notes.
Introductory Accounting
Frank T. Kane
Study Guide
Accounting, financial accounting, Intro to Accounting
50 ?




Popular in Introductory Accounting

Popular in Business

This 4 page Study Guide was uploaded by Rachel Rozow on Saturday September 24, 2016. The Study Guide belongs to MGMT 200 at Purdue University taught by Frank T. Kane in Fall 2016. Since its upload, it has received 7 views. For similar materials see Introductory Accounting in Business at Purdue University.


Reviews for Exam 1 Study Guide


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 09/24/16
Accounting Study Guide: Exam 1 ­Business Entity: A company or business ­Events and Transactions: What takes place, the actions of the company ­Storage Units: Where information of the actions is placed ­Financial Statements: The reports constructed with the information of  transactions after a prescribed period (30 days to one year), Monetary biographies The Financial Statements: 1) Balance Sheet 2) Income Statement 3) Statement of Changes in Equity 4) Statement of Cash flows The two primary functions of Financial Accounting are to measure business activities and to communicate said activities to external parties. In financial accounting, the users are  external, the rules must follow GAAP (Generally Accepted Accounting Principles), the  objective must be verifiable, and the emphasis is on the history of the company. The Accounting Equation Assets = Liabilities + Stockholders’ Equity Stockholders’ Equity = Revenues – Expenses – Dividends (or) Stockholders’ Equity = Profit – Dividends ­All profits/net income of a business entity are/is claimed by stockholders Business Structures ­Sole proprietorships: business owned by one person (most common in the US) ­Partnership: business is owned by two or more persons ­Corporations: business is legally separate from the owners, stockholders Limited liability of stockholders Financing activities: transactions the company has with investors and creditors Investing activities: transactions involving the purchase and sale of resources that  provide benefit for several years Operating activities: transactions that relate to the primary operations of the  company *I would suggest looking at the models of all the reports from the book Financial Statements:  ­repots revenues and expenses over a period of time ­all accounts ending in “expense” or “revenue” should appear in an  income statement Statement of Stockholders’ Equity: ­summarizes the changes in stockholders’ equity over time ­Change on Retained Earnings = Net Income – Dividends Balance Sheet: ­a point in time of the income statement ­“assets” and “resources” are interchangeable Statement of Cash Flows ­measures activities involving receipts and cash payments over time ­ Operating cash flows: cash transactions involving revenues and expenses ­Investing cash flows: cash transactions involving long­term assets ­Financing cash flows: cash transactions involving lenders and  stockholders Order of Preparation: Income Statement, Statement of Stockholders’ Equity,  Balance Sheet, Statement of Cash Flows FASB­ Financial Accounting Standards Board ­governed by the SEC (Securities Exchange Commission) IASB­ International Accounting Standards Board Objectives of financial accounting: Financial information ­Useful for decision making by investors and auditors (hired by the board  of directors to ensure financial reports are following the standards of the GAAP) ­Assists in the prediction of future cash flows ­Displays economic resources, claims to resources, and changes between  the two ­The most important objective ­or one of them­ is predicting cash flows Account: summary of all transactions related to a particular event or item over a period of time Chart of Accounts: a list of all the account names ­each transaction will have a dual effect on the equation, so make sure to ask  yourself: What is one account affected by the transaction? What is the second account affected by the transaction? Where do the credit and the debit apply? Transactions using the expanded equation: Provide a service, ship a product = change in revenue Promise to pay, payment = change in assets Salaries, wages, cost of materials = expenses Differed revenue is when revenue is recorded but not counted Debits and Credits: Liabilities and Equity Accounts increase in credit and decrease on debit Asset Accounts increase on debit and decrease on credit Assets(Dr) = Liabilities(Cr) + Equity(Cr) Expense recognition: anticipating the costs of an event and dealing with them  before the event takes place­ these are not recorded until the revenue is generated from  said event. These costs may include salaries of employees, purchase of supplies, and  estimated costs involved with fuel The difference between accrual­basis and cash­basis accounting lies in the timing  of when revenues and expenses are incurred and recorded: A company using and not  paying ­accumulating an expense­ would be a good example of an accrual, whereas the  payment of cash for something that is not used immediately would apply to cash­basis  accounting Monthly financial statements in monthly, two­month or three­month, quarter, and year  are expected from a business entity, complicating the process for accountants. They have  to still prepare reports for the month alone in addition to any significant time period that  may have passed. Ex­ end of the year will include the twelfth month, the final quarter, the end of year… Deferrals: Prepaid expenses­ pay cash to purchase an asset in the current period that will be  recorded as an expense in a future period(s) Deferred Revenues­ receive cash in the current period that will be recorded as a  revenue un a future period(s) Accruals: Accrued expenses­ record an expense in the current period that wull be paid in  cash in a future period(s) Accrued revenues­ record a revenue in the current period that will be collected in  cash in a future period(s) 1) Asset and Expense­ allocating recorded costs between two or more accounting  periods 2) Expense and Liability­ recognizing unrecorded expenses  3) Revenue and Liability­ allocating recorded unearned revenues between two or  more accounting periods 4) Revenue and Asset­ recognizing unrecorded earned revenues Post adjusting entries and prepare an adjusting trial balance: Adjusting trial balance  ­lists all account balances after updating them for adjusting entries ­prepared after posting the adjusting ­determine the accounts requiring adjustment, using the unadjusted trial balance ­record the adjusting entries in the journal ­post the adjusting entries to the general ledger ­prepare an adjusted trial balance Once the adjusted trial is complete, financial statements can be made. Assets: ­current assets ­investments ­property, plant, and equipment ­intangible assets Liabilities: ­current liabilities ­long­term liabilities Stockholders’ Equity: ­contributed capital ­retained earnings The Closing Process: Closing entries ­to transfer the balances of all temporary accounts to the balance of retained  earnings.  With the accounting equation, we are going to take the temporary accounts ­revenues,  expenses, dividends­ and close them so that the reset to zero. What was contained should  be moved to retained earnings (the master account) as credit. The revenue accounts are  ultimately debited. Post­closing trial balance The result is demonstrated balance in retained earnings, with no accounts for  revenue and expenses.


Buy Material

Are you sure you want to buy this material for

50 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Anthony Lee UC Santa Barbara

"I bought an awesome study guide, which helped me get an A in my Math 34B class this quarter!"

Steve Martinelli UC Los Angeles

"There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."

Parker Thompson 500 Startups

"It's a great way for students to improve their educational experience and it seemed like a product that everybody wants, so all the people participating are winning."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.