Study Guide for Midterm 2.pdf - Study Guide for Second...

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1 Study Guide for Second Midterm This exam will contain 15 multiple choice questions (2 marks each so 30 marks in total) and 4 show-your-work problems (70 marks in total). So the maximum marks you can earn on the second mid-term exam are 100. Each multiple-choice question has only ONE correct answer. Your answers to multiple- choice questions will only be graded if you follow the instructions on the cover page of the exam and write them in the right space provided. The first show-your-work problem (16 marks) requires you to apply allowance method (Chapter 6). The second show-your-work problem (17 marks) asks you to apply inventory costing methods (Chapter 7). The third show-your-work problem (18 marks) asks you to apply three different depreciation methods (Chapter 8). The last show-your- work problem (19 marks) is on accounting for bond (Chapter 10). Each show-your-work problem may contain a few smaller questions. You should bring your own calculator. Financial calculators are not allowed. You are not allowed to borrow a calculator so if you fail to bring your own calculator, you will just have to take the exam without it (you will not be allowed to use the calculator on your cellphone, iPad, laptop, etc.). To best prepare for this exam, you should study all slides and review all homework questions. Chapter 4 Be familiar with the accounting cycle (there is no need to memorize the steps) Know what is unadjusted trial balance For closing process, o Know the definition of permanent (or real, stock) accounts as well as temporary (or nominal, flow) accounts. o Know that assets/liabilities/equity/contra-asset accounts are permanent accounts. Revenues/expenses/gains/losses are temporary accounts. o Know that temporary accounts will be reset to zero every fiscal period. During the closing process, you JE to close revenues Dr. Revenues Cr. Retained Earnings JE to close expenses Dr. Retained Earnings Cr. Expenses You will not be asked to prepare unadjusted or adjusted trial balance on this exam. Chapter 6
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2 Understand the revenue principle o For sellers of goods FOB shipping point FOB destination o For service companies Understand the three different forms of sales o Cash sales o Credit card sales o Credit sales Note that credit sales are different from credit card sales and only credit sales generate Accounts Receivable Understand the concepts of Sales Revenue (Gross), Net Sales, and Gross Profit o Know the formula to calculate Net Sales Net Sales = Sales revenue (Gross, including all forms of sales) Credit card discounts (if any) Sales discounts (if any) Sales returns and allowances (if any ) o Understand and be able to calculate Credit card discounts/ Sales discounts/ Sales returns and allowances o Gross Profit = Net Sales Cost of Goods Sold The focus of Chapter 6 is Allowance Method (Direct write-off method will not be covered on your second midterm exam) o Understand the concept of Bad Debt o
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  • Summer '14
  • Depreciation, Generally Accepted Accounting Principles

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