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Exam 1 Study Guide

by: Kristen DeVries

Exam 1 Study Guide ACCT 3130

Marketplace > Clemson University > Accounting > ACCT 3130 > Exam 1 Study Guide
Kristen DeVries
GPA 3.85
Intermediate Financial Accounting III
Dr. Irving

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About this Document

Chapter 13 - Contingencies Chapter 17 - Investments Course Introduction Other Important Topics (such as earnings management and financial ratios) Study Guide includes review questions and an ...
Intermediate Financial Accounting III
Dr. Irving
Study Guide
50 ?




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This 6 page Study Guide was uploaded by Kristen DeVries on Monday September 14, 2015. The Study Guide belongs to ACCT 3130 at Clemson University taught by Dr. Irving in Summer 2015. Since its upload, it has received 114 views. For similar materials see Intermediate Financial Accounting III in Accounting at Clemson University.

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Date Created: 09/14/15
Exam 1 Study Guide for Irving ACCT 3130 25 30 Questions Mostly calculationbased mini cases and conceptual questions Bring only a pencil and four function calculator Below is an outline of topics we have covered as well as topics from the readings Use this as a general guideline and not as a limited list of items to study 0 Course Introduction 0 Primary theme of the course 0 Purpose of nancial reporting 0 Overview of nancial reporting process 0 Potential glitches in process 0 Other Important Topics 0 Financial Ratios DuPont Model Current Ratio 0 Earnings Management Contingencies CH 13 0 De nition 0 Gain Contingency brie y review no extensive studying needed 0 Loss Contingencies Litigation Environmental Liabilities Guarantees and Warranties 0 Dr Pepper in class caseexercise o Investments CH 17 0 Overview 0 Minority Passive Trading Available for Sale AFS Held to Maturity HTM o Minority Active Equity Method Accounting 0 Majority Consolidation Accounting Consolidated Financial Statements Review Questions 1 What is the primary theme of this course Why 2 What is the purpose of nancial reporting 3 Which of the following is not required for nancial reporting a timely b comparable c detailoriented d accurate 4 Which of the following is an internal bene t of nancial reporting a to raise capital b trend analysis c debt covenants d to gain investor trust 5 What are some parties that rely on the nancial reporting process 6 Which of the following is a company driven glitch in the nancial reporting process a political pressure b unrecorded net assets c aggregation compilation of nancial information d incentive misalignment 7 Which of the following ratios measures leverage a Pro t Margin b Asset Turnover c ROA d ROE e Equity Multiplier 8 In the DuPont Model the RCA consists of which two ratios a ROE and asset turnover b Quick ratio and ROE c equity multiplier and Pro t Margin d Pro t Margin and Asset Turnover 9 True or False Gain contingencies are recorded in the footnotes if it is reasonably possible and estimable 10 The recording of loss contingencies depends on a the likelihood of the event b the timing of the event c management s opinions of the event dtaxes 11 Name three of the most common examples of a loss contingency 12 Net Income divided by Net Sales is a measure of a ef ciency b liquidity c pro tability d borrowing capacity 13 True or False A HeldtoMaturity investment can only be an equity secur y 14 Which of the following is reported on the Balance Sheet before sold a trading b available for sale c held to maturity 15 When is the equity method of accounting used a when a company has passive interest b when a company holds less than 20 c when a company has signi cant in uence d when a company plans to hold a security until its maturity date Solutions 1 Flexibility Intermediate nancial accounting involves lots of choices estimates and subjectivity therefore it is a requirement to be exible 2 The purpose is to provide nancial information that is useful for future users 3 C the main focus is not to include small detailsimmaterial events 4 B all other options are external bene ts 5 lenders bankers investors management regulators auditors suppliers customers media competitors 6 D agency theory principalagent problem 7 E 8 D 9 False only disclosed if high probability 10 A 11 Warranty guarantee environmental liabilities litigation etc 12 C this is the pro t margin a measure of pro tability 13 False they can only be debt securities because equity securities have no maturity date 14 B reported at fair value on the balance sheet until sold Then recorded as net income on the income statement 15 C signi cant in uence is when a company holds 2050 a minority active investment


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