ACCT 101 Exam 2 Outline Fall 2024 PDF

ACCT 101 Exam 2 Outline, Policies & Guidelines Updated November 6, 2024 EXAM DATE: November 12, 2024 LOCATION: Classroom FORMAT: Paper Exam/Closed Book I. EXAM OUTLINE A. General Information Exam w...

ACCT 101 Exam 2 Outline, Policies & Guidelines Updated November 6, 2024 EXAM DATE: November 12, 2024 LOCATION: Classroom FORMAT: Paper Exam/Closed Book I. EXAM OUTLINE A. General Information Exam will cover Chapters 4, 5 & 6 Approximately 40 multiple-choice questions (note: make up exam format may be different) About half of the questions are conceptual (i.e., do not involve numbers) You are expected to read each chapter in the textbook when the chapter is covered in class. For the exam, you should focus your studying on the topics covered in your class notes, class exercises, class supplements (if applicable) and homework assignments. The textbook should be used as a supplement to the material covered in class and homework. B. Some topics that might appear on your exam Chapter 4* Cash basis vs accrual accounting Revenue recognition principle Expense recognition principle (also referred to as the “matching principle”) Adjusting entries: Why and when are adjusting entries recorded? Prepaid expenses, unearned revenues, accrued revenues, accrued expenses. How and why is each entry recorded? What would be wrong with the financial statements if a required adjusting entry was not recorded? Closing entries – know what the ending account balances will be after closing entries are posted, which accounts are closed, purpose of closing entries, when are closing entries recorded. You are not responsible for journalizing the closing entries. Depreciation – computation of periodic depreciation expense, total accumulated depreciation & book value; financial statement presentation etc. Interest – computation of interest expense accrued on a note payable Steps in the recording process (i.e., accounting cycle) Chapter 5* Single step income statement vs. multiple step income statement Advantages & disadvantages of single step versus multiple step income statement How is gross profit computed? Cost of goods sold? Net Sales? Net income? Impact of gains and losses on the income statement 1  Difference between perpetual and periodic – conceptual. Advantages versus disadvantages, taking a physical inventory, etc. Journal entries (perpetual only) for purchases and sales related transactions covered in class exercises, notes, and homework. Freight costs – impact on accounts, FOB shipping versus FOB destination, etc. Computing and/or recording purchase discounts & purchases returns Recording sale of merchandise Gross profit rate and profit margin ratios Note: You are not responsible for the following: Appendix 5A and Appendix 5B (Periodic Inventory System journal entries and Adjusting Entries for Credit Sales with Returns & Allowances) Chapter 6* Specific identification, FIFO, LIFO and average cost inventory (“cost flow”) methods. Lower of cost or net realizable value (LCNRV) method – computation. Reason for following this method. FOB Shipping versus FOB Destination. Freight costs. Title (ownership). Computation of ending inventory and cost of goods sold using FIFO, LIFO and average cost Tracking inventory costs: cost of goods available for sale, cost of goods sold, cost of ending inventory, cost of beginning inventory Which methods provide an estimated cost of ending inventory and which provides and accurate cost of ending inventory? Advantages and disadvantages of using the specific identification method Financial statement and tax effects of the different inventory methods *some topics might appear in more than one chapter II. POLICY ON MAKE-UP EXAMINATIONS To be eligible for a make-up examination, a student must submit to the instructor the reason for missing a scheduled examination due to medical problems or death of an immediate family member. The instructor (not the student) determines whether, when, and how a make-up is to be given. If a make-up examination is to be given, the instructor will determine the type of make-up examination. Additional make-ups are not permissible if the student misses the scheduled make- up examination (for any reason except for medical problems). If a student misses an examination and does not qualify for a make-up examination, the student will receive a grade of zero (0) for the examination. III. Practice Questions – Available on Canvas in “Exam 2 Study Material” 2