Test#1 Study Guide - ACCTG 230 – Exam Coverage – Spring 2011 Obviously I will not be able to test you on everything included in this review

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Unformatted text preview: ACCTG 230 – Exam Coverage – Spring 2011 Obviously I will not be able to test you on everything included in this review sheet and it may not be inclusive of all the material covered in the exam but it is a good tool to get you prepared for Exam #1. Chapters 1, 2, 3 and 4 It is always good to review the study objectives at the beginning of each chapter and be able to demonstrate you understand the objectives. It is also good to review the terms of each chapter to make sure you understood what was covered in the chapter. The homework underscores the material covered in the chapters. Other Items to review: • Forms of a Business: o Sole Proprietorship Single owner Most control Tax advantages o Partnership Multiple owners Tax advantages o Corporation Easier to raise funds No personal legal liability o Internal User Managers who plan organize and run the business o External User Investors, creditors, tax authorities etc. Anyone outside of the business that uses accounting info • Business Activities: Know how to classify activities into each category o Operating Sales, service and interest revenue All expenses Assets with shorter lives (Inventory and supplies) o Financing It takes money to make money Financing activities are bonds issued by banks and common stock sold for cash Bonds Payable Gaining money o Investing Purchase of resources that the company needs to operate Investing in securities (stocks or bonds) is another investing activity Putting Money to work • Review the 4 Basic Financial Statements: o The Classified Balance Sheet (Certain date) Assets = liabilities = stockholders equity Assets first followed by liabilities and stockholders equity (2 parts common stock and retained earnings) o The Retained Earnings Statement (for the month ended) Used to show how much is going to stockholders as dividends and how much is kept to further grow the business o The Income Statement (for the month ended) Revenues followed by expenses Highest to lowest Net Income at the bottom (revenues – expenses) Amounts received from issuing stock are not revenues and amounts paid out as dividends are not expenses o The Cash Flows Statement (for the month ended) Shows effects of operating financing and investing activates Ex. Cash from operating activities • Cash receipts from operating activities • Cash Payments for operating activities o net cash provided by operating activities • Know how statements interrelate Elements of each statement and form of each statement. Know which accounts are an asset, liability or stockholder's equity accounts • Accounting Entities o An accounting entity can be either a business or subdivision of a business that engages in economic activities, has economic assets and resources that must be accounted, and is separate from the personal dealings of its owners • Sources of Accounting Rules FASB o Financial accounting standards board...
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This note was uploaded on 01/30/2012 for the course ACCTG 230 taught by Professor Pearson during the Spring '07 term at Washington State University .

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Test#1 Study Guide - ACCTG 230 – Exam Coverage – Spring 2011 Obviously I will not be able to test you on everything included in this review

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