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Acct 201: Study Guide Chapters 4-6

by: George Maxwell Miller

Acct 201: Study Guide Chapters 4-6 ACCT 201

Marketplace > University of Louisville > Accounting > ACCT 201 > Acct 201 Study Guide Chapters 4 6
George Maxwell Miller
U of L
GPA 3.7

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This consists of information needed for chapters 4-6* *3-6 in other classes
Intro to Accounting 1
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This 6 page Study Guide was uploaded by George Maxwell Miller on Wednesday March 9, 2016. The Study Guide belongs to ACCT 201 at University of Louisville taught by Johnston in Spring 2016. Since its upload, it has received 40 views. For similar materials see Intro to Accounting 1 in Accounting at University of Louisville.

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Date Created: 03/09/16
ACCOUNTING 201 Study Guide EXAM #2 (Chapters 4­6) The second exam will cover chapters 4­6.  Appendix A and Appendix B from each chapter will  not be tested.  There will be 40 multiple choice questions on the exam and each chapter is equally weighted.  If you miss the exam, you will be required to take a make­up exam given finals week.   Please see the policy on the syllabus for missed exams.  The exam will cover mainly the topics  covered in the homework, in­class work, and in class discussions.  The majority of the questions  will come from items below:  Chapter 4 Multiple­Step Income Statement components SALES (­)Less: discounts (­)Less: Returns and Allowances NET SALES= (­) COST OF GOODS SOLD =GROSS PROFIT EXPENSES Selling expenses Advertising Rent Expense Etc… TOTAL SELLING EXPENSES= General Administration expenses Office Supplies Rent for Office Space (Anything you would NOT associate with selling, but instead with running the  business goes here) TOTAL “  “ EXPENSES= TOTAL EXPENSES= ALL EXPENSES ADDED UP NET INCOME= REVENUE – EXPENSES (LOOK UP “OTHER REV. + EXP.) Single­Step Income Statement components  REVENUE NET SALES EXPENSES COST OF GOODS SOLD SELLING EXPENSES (TOTAL “ “ EXPENSES) GENERAL ADMINISTRATION EXPENSE NET INCOME Gross margin Net Sales­Cost of Goods Sold   Acid test ratio Cash and Cash Equivalents+Short­term Investmenrs+Current Receivables Current Liabilities Gross margin ratio Net Sales­Cost of Goods Sold Net Sales Cost of merchandise inventory Operating cycle A. Purchase B. Merchandise Inventory C. Credit Sales D. Accounts receivable E. Cash Collection Merchandise inventory Credit terms / discounts A= L + CS – DIV + REV ­ EXP Always look at accounts…: Cash, Merchandising interest, A/R, A/P, Cost of Goods Sold, Sales, Sales Discounts, Sale Returns+allowances, Interest Expense st th Car bought on June 1  at $10,000 2/10 N/30 and paid on June 8 DISCOUNT ­ $200 PAY ­ $9,800 ACCOUNT(s):  BUYER: accounts payable 10,000 ­10,000 Cash ­9,800 Interest Revenue  +200 SELLER: Merchandise inventory Cr. 10,000     Accounts Receivable    Dr. 10,000     ______________________________     Cash   Dr. 9,800     A/R   Cr. 10,000     Discount Expense         Dr. 200 Chapter 5 Calculation of ending inventory and cost of goods sold using FIFO, and LIFO Effects of costing methods FIFO assigns the lowest amount to cost of goods sold yielding the HIGHEST GROSS  PROFIT AND NET INCOME LIFO assigns the highest amount to cost of goods sold yielding the LOWEST GROSS  PROFIT AND NET INCOME which could mean for TAX ADVANTAGES by postponing  payment on income tax. Lower of cost or market  IN BOOK BENEFITS FOR FIFO/LIFO IF THERE WAS A LOWER IN COST AT THE END OF THE MONTH YOU’D USE LIFO Effects of inventory errors  If someone counts the inventory wrong, broken/damaged inventory, “Projected/expected losses” Chapter 6 Basic internal control principles 1. Establish responsibility 2. Maintain adequate records 3. Insure assets and bond key employees 4. Separate recordkeeping from custody of assets 5. Divide responsibility for related transactions 6. Apply technological controls 7. Perform regular and independent reviews Bank reconciliation   The balance of a checking account reported on the bank statement rarely equals  the balance in the depositors accounting records. o o Check balance per bank o Check balance per book o +Deposits in transit o +collections & Interest o –Outstanding checks o –Uncollectable items o +/­ Errors o +/­ Errors o =adjusted cash balance o =adjusted cash balance Look at BANK STATEMENTS and YOUR STATEMENTS in order to see what you’re  off on and adjust Example: company got a check but the bank hasn’t recorded the check. What entry do  you make?  Chapter 4 – Approximately 54% computations and journal entries; 46% theory, etc.  Chapter 5 ­ Approximately 31% computations; 69% theory, etc. Chapter 6 – Mainly theory questions focusing on basic internal control principles and the bank  reconciliation.   MULTIPLE CHOICE QUESTIONS There are five multiple choice questions at the end of each chapter with answers. DISCUSSION QUESTIONS, QUICK STUDY, ASSIGNED & GRADED HOMEWORK The answers to the discussion questions, quick study questions, assigned exercises, and graded  homework problems can be found on Blackboard under “Course Documents.”


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