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Final Exam Review Notes

Final Exam Review Notes - • Inventory perpetual vs...

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35 Multiple Choice 2 Free Response 3 Hours ECJ 1.202 7 PM Chapter 2 Elements of balance sheet (assets, liabilities, equities) A promise exchanged for another promise is NOT recorded as a transaction Every transaction affects at least TWO accounts Pay attention to… o Prepaid expenses (an asset) o Unearned revenues (a liability) o Accrued expenses Debit = left and credit = right Chapter 3 Income statement Operating cycle (break into time periods) Net income Retained earnings Equity Operating revenues and expenses = from purpose of business Non-operating gains and losses = from peripheral activities Income tax expense Earnings per share (EPS) ratio Cash vs. accrual basis of accounting o Revenue principle (revenue recorded when earn ed) o Matching principle (expenses recorded when incurred) o Exchange of CASH does not dictate when entry is recorded
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Unformatted text preview: • Inventory: perpetual vs. periodic Chapter 4 • Trial balances • Adjustments • Close accounts to a ZERO balance • Temporary accounts = income statement accounts Chapter 13 • Cash flows • Δ Cash = Δ liabilities + Δ equity – Δ noncash assets Chapter 6 • Bad debt expense and Allowance for doubtful accounts • Estimating bad debt expense o Percentage of credit sales method o Aging method gives amount for ENDING balance for Allowance for doubtful accounts, NOT bad debt expense amount • Bad debt expense adjusting entry is an ESTIMATE! • Writing off account (Allowance for doubtful account) is EXACT! • Cash is most easily stolen asset Chapter 7 • Inventory: tangible property • Work-in-process inventory includes direct labor and factory overhead...
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