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Examination_2_Preparation

Examination_2_Preparation - Chapters Covered Five Four and...

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Chapters Covered: Five, Four, and Eighteen. Material/Topics : Class notes and discussions. All assigned homework questions. It will be expected that you have completed and understand all assigned text and the main issues of the two supplemental readings for this module. Chapter 5. Topics. Usefulness and limitations of balance sheet. Format and classifications Some issues about balance sheet presentation – see questions on class notes Supplemental balance sheet information Techniques of disclosure (face of statements, parenthetical, footnotes, etc.) Ratio analysis – liquidity and solvency Purposes, uses, and classifications of statement of cash flows Free cash flow – how compute and its relevance (meaning) Preparation of simple cash flows statement – indirect method for CFOPS Chapter 4 . Topics Income statement, purpose, classifications and formats: multiple step, what goes in each step and significance of what is reported in each part. single-step – what goes where and how differs from multiple-step Limitations of and concerns about income statement reporting Intraperiod tax allocation Profitability ratios – ROA and ROE EPS – basic computation, significance, and presentation Reporting comprehensive income Reporting irregular items Discontinued operations Extraordinary items Change in accounting principle Unusual or infrequent items (e.g. restructuring costs) Change in estimate Prior-period adjustments Statement of stockholders’ equity Chapter 18. Topics Revenue recognition: basic rule and alternative situations Percentage-of-completion and completed-contract methods – criteria for usage, computations, and journal entries for both profitable and unprofitable contracts Installment sales – criteria for usage, basic method and cost recovery method, including repossessions and journal entries Concerns about revenue recognition abuse Acctg 301 – Examination 2 Preparation, 2007 1
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Format: Total Points 100. Part 1 multiple choice; Part 2, essay; Part 3, financial statement problem; Part 4, revenue recognition problem. Solutions to all questions begin on P. 11. Part 1. Multiple-choice: Note that these are NOT the ones that will be on your exam. They simply give you practice at thinking about the topics. 1. The basis for classifying assets as current or non-current is conversion to cash within a. the accounting cycle or one year, whichever is shorter. b. the operating cycle or one year, whichever is longer. c. the accounting cycle or one year, whichever is longer. d. the operating cycle or one year, whichever is shorter. 2. All of the following are limitations of the balance sheet except a. Current practice shows summary line items rather than detailed account information.
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