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330 Exam 2 Review Sheet.doc - Exam 2 Review Sheet The...

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Exam 2 Review SheetThe chapters included on this test are Chapter 5, Appendix 5a, Chapter 6, and Chapter 7.Remember, for any journal entry we make in this class, you should be able to analyze how thatjournal entry (or failure to record that journal entry properly) affects the basic accountingequation.For example: In chapter 7 we learn that we make an adjusting entry to record bad debtexpense for the year. Let’s say a company correctly recorded $5,000 of bad debt expense in2019. The effect of this journal entry on the basic accounting equation would be:Assets: Decrease, Liabilities: No Effect, Stockholders Equity: DecreaseWhat if the company mistakenly recorded $10,000 of bad debt expense (instead of $5,000), thenthe basic accounting equation would be out of balance:Assets: Understated, Liabilities: Correct, Stockholders Equity: UnderstatedChapter 5Do you understand the usefulness as well as the limitations of the balance sheet?
Do you understand the three reasons discussed chapter 5 regarding why balancesheet classifications exist?
What determines if an asset or liability is classified as current or long-term. Be able tolist examples of each.

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Term
Spring
Professor
N/A
Tags
Accounting, Balance Sheet, Generally Accepted Accounting Principles

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