ACC 131 Seipp Exam 1 Study Guide
ACC 131 Seipp Exam 1 Study Guide ACC 131
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This 5 page Study Guide was uploaded by Daniel Hemenway on Monday September 14, 2015. The Study Guide belongs to ACC 131 at Illinois State University taught by Edward Seipp in Summer 2015. Since its upload, it has received 206 views. For similar materials see Financial Accounting in Accounting at Illinois State University.
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Date Created: 09/14/15
ACC 131 Seipp Exam 1 Study Guide Accounting 131002 Exam 1 Study Guide Chapters 123 This study guide encompasses the majority of the questions on the first exam but may not be all inclusive These study items are in no particular order 1 What are the different forms of business organizations and the advantages and disadvantages of each Sole proprietorship personal liability easin formed controled by owner Partnership access to partners tax advantages personal liability shared control Corporation easy to raise money limited liability more complex to set up higher taxes 2 What are the main activity categories businesses engage in Investing financing and operating 3 Know the fundamental accounting equation and be able to manipulate it into various forms Assets Liabilities Stockholders Equity Stockholders Equity contributed capital retained earnings Retained earnings Beginning ret Earnings net income dividends Assets Liabilities cont cap beginning ret Earnings net income dividends 4 What is the definition of retained earnings and how is it calculated Be able to use the formula to calculate each of its components beginning retained earnings net income dividends and ending retained earnings The accumulated earnings or losses over the entire life of the corporation that have not been paid out in dividends Retained earnings Beg Ret Earnings net income dividends ACC 131 Seipp Exam 1 Study Guide 5 Which of the financial statements are prepared for a period of time and which are prepared for a point in time Point in time Balance sheet Period of time Statement of Retained Earnings Income Statement Statement of Cash Flows 6 What is the objective of financial reporting Effectively communicating a company s activities to decision makers 7 What is the definition of a current asset and a current liability Current Assets Cash and other assets that are expected to be converted to cash within 1 year or 1 operating cycle whichever is longer Current Liabilities obligations that will be satisfied through the payment of cash or by providing goods or services within one year or the operating cycle whichever is longer 8 What are the different classes of accounts shown on a balance sheet Assets Cu rrent Long Term Liabilities CurrentLong Term Stockholders Equity 9 What is the historical cost principle The activities of a company are initially measured at their cost the exchange price at the time 10 What is a journal ledger and a taccount Journal Chronological record showing the debit and credit effects Ledger Collection of financial statement accounts TAccount T chart showing both a left and right side The left Debit DR and the right Credit CR ACC 131 Seipp Exam 1 Study Guide 11 What is the process of transferring data from the journal to the ledger called Posting 12 What are the definitions of debit and credit Debit The left side of a Taccount alternatively debit may refer to the act of entering an amount on the left side of an account Credit The right side of a Taccount alternatively credit may refer to the act of entering an amount on the right side of an account EAL U Debit DR Credit CR mUZquot39Ult mmmzrn39ox m lrnmm lt COI39I39I rnczrnltrn U3l39l39l Il wjgt 13 Be able to identify the normal balances of each of the different account classes and individual accounts Assets DR Liabilities CR Stockholders Equity CR 14 You will be given a list of transactions for an accounting period You will be required to identify the correct journal entries that need to be made ACC 131 Seipp Exam 1 Study Guide 15 What is the difference between cash basis accounting and accrual basis accounting Cash Basis Revenue is recorded when cash is received regardless of when it is actually earned Accrual Basis Generally Accepted Revenue is recorded when it s earned or incurred 16 Know the revenue recognition principle and the matching expense recognition principle and be able to apply them Revenue Recognition determines when revenue is recorded and reported 1 Revenue has been earned 2 Collection of cash is reasonably assured Expense Recognition Matching the process of identifying an expense with a particular time period 17 What are the different types of adjusting entries Accrued Expenses Previously unrecorded that have been incurred but not yet paid in cash Accrued Revenues Previously unrecorded revenues that have been earned but for which no cash has yet been received Deferred Prepaid Expenses Assets arising from the payment of cash which have not been used or consumed by the end of the period Deferred Unearned Revenues Liabilities arising from the receipt of cash for which revenue has not yet been earned ACCRUALS DEFERRALS Accrued Expenses Deferred Prepaid Expenses Accrued Revenue Deferred Unearned Revenues 18 Be able to make various adjusting entries Step 1 Identify accounts that require adjusting pairs of income statement and balance sheet accts Step 2 Calculate the amount Step 3 Record the adjusting entries ACC 131 Seipp Exam 1 Study Guide 19 Know what temporary accounts and permanent accounts are Permanent Balance sheet Accts assets liabilities stockholders equity Temporary Revenues expenses and dividends 20 Be able to identify the effect that failing to make each of the different types of adjusting entries has on the income statement and balance sheet
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