ACCT 640 Mid Term Review - ACCT 640 Mid-Term Review Chapter...

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ACCT 640 Mid-Term ReviewChapter 1Introducing Financial AccountingGeneral:3 Types of businesses; How do they differ? What are advantages/disadvantages of each?oSole ProprietorshipoPartnershipoCorporation3 Types of business activities?What kind of transactions fall into each?oFinancing – how you pay for your growthoInvesting – how you grow your companyoOperating – everyday activitiesWho are the users of accounting information?How do they differ in what they areneeding regarding the information?oManagerial (internal users)vsFinancial (external users) accountingBalance Sheet:What does a balance sheet show?Know and understand the accounting/balance sheet equation(A = L + SHE)Define the 3 elements of the balance sheet.oAssetsoLiabilitiesoStockholders (or Owners) EquityGiven a set of accounts, but missing a few components, calculate the missing components(i.e. liabilities, contributed capital, etc…).Income Statement:
What does the income statement show?
Define the 2 elements on the income statement.
How does a multi-step income statement differ from a simple income statement?
Given a set of accounts, but missing a few components, calculate the missing component(i.e. revenues, expenses, etc…)Statement of Retained Earnings:What does a Statement of Retained Earning show?
Statement of Cash Flows:What does it show?What are the 3 parts?oOperatingoInvestingoFinancingHow the Statements Relate:Know the order in which the 4 financial statements should be preparedUnderstand how information from each “flows” into the next one.
Be able to understand how the financial statement equations relate to each other and beable to use them together to solve a problem.Conceptual Framework:Know and understand what the basic objective of accounting is and what the parts of theconceptual framework are (assumptions, principals, and constraints) and how they tie intoaccounting.Book has a good explanation of these.Responsibilities:Know what GAAP is.Understand the different parties included in the making up of GAAP and what their rolesareUnderstand the different parties responsible for correct accounting practices in a company(management vs. auditors) and what the responsibilities of each areKnow the basic components of the Sarbanes – Oxley Act from class handoutsUnderstand the steps that decision makers should take when thinking about ethicaldilemmasChapter 2Constructing Financial StatementsConceptual Framework:Know and understand what the qualitative characteristics of accounting information.
Book has a good explanation of these.Classified Balance Sheet

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Term
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Accounting, Financial Accounting, Balance Sheet, Income Statement, Revenue, Generally Accepted Accounting Principles, AJE

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