Wednesday, July 10, 2013

Principles of Financial Accounting

PRINCIPLES OF FINANCIAL ACCOUNTINGPRINCIPLES OF FINANCIAL ACCOUNTING This test is an introduction to the field of financial accounting. It covers the accounting cycle, merchandising concerns, and financial assets as well plant assets, liabilities and stockholders’ equity. Topics include: recording business transactions, summarizing these transactions, and preparing, interpreting and using financial statements. (3 credits) ACC-101-TE This is a two-hour examination in which you must answer 100 multiple-choice questions worth 1 point each. A passing score is 60 out of 100 points. Here are the topics covered and their approximate importance on the test: I. BASIC FINANCIAL STATEMENTS (15%) A. Financial accounting as the language of business B. Internal and external elements used to create integrity in reported financial information C. How business transactions affect

the accounting equation (Assets = Liabilities + Owner’s Equity) D. Nature and purpose of financial statements (income statements, balance sheets, statement of cash flows) E. Accounting principles required to understand financial statements and relationships among financial statements II. THE ACCOUNTING CYCLE (30%) A. Theory of debits and credits B. Accounting cycle from journal entry to financial statements C. Revenue realization; matching and materiality principles D. Adjusting and closing entries E. Characteristics of sole proprietorships, partnerships, corporations F. Journal entries for partnerships-investments; withdrawals; division of net income III. ACCOUNTING FOR MERCHANDISING ACTIVITIES, FINANCIAL ASSETS, INVENTORIES, COST OF GOODS SOLD (15%) A. Accounting for purchases/sales/end-of-year adjustments using perpetual inventory system and periodic inventory system B. Using perpetual inventory system, determining cost of goods sold using average cost, FIFO, LIFO C. Physical inventory; effects of inventory valuations on financial statements; evaluating (rate of inventory turnover) effectiveness of inventory management D. Estimating ending inventory and cost of goods sold using gross profit and retail methods E. Subsidiary ledgers and special journals F. Financial assets and their valuation on balance sheets; evaluating performance of merchandising companies G. Objectives of cash management; internal controls over cash; preparing bank reconciliations H. Accounting for uncollectible receivables using allowance method and direct write-off method; evaluating liquidity of accounts receivables I. Computing and accounting for notes receivable and interest revenue IV. PLANTS AND INTANGIBLE ASSETS; LIABILITIES (15%) A. Capital expenditures; revenue expenditures B. Calculating cost of plant assets; depreciation (straight-line, units of production, declining- balance), journalizing acquisition of assets; depreciation; disposal C. Intangible assets (amortization); natural resources (depletion) D. Current and long-term liabilities E. Accounting for notes payable F. Amortization tables for payables G. Accounting for payroll and related costs H. Present value as it relates to bond prices I. Tax advantages of debt financing J. Accounting for bonds issued at face value, at a discount, at a premium K. Capital leases; operating leases V. STOCKHOLDERS’ EQUITY; INCOME AND CHANGES IN RETAINED EARNINGS (25%) A. Publicly owned and closely held corporations; advantages/disadvantages of organizing a business as a corporation; stockholders rights; roles of corporate directors and officers B. Accounting for common stock and preferred stock including Treasury Stock C. Differences of par value, book value, market value pertaining to common and preferred stock D. Purpose of and effects of stock splits E. Preparing equity section of corporate balance sheets F. Presenting discontinued operations, extraordinary items, accounting changes in income statements...

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