Exam 1 Study Guide- Part B

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Exam 1 Study Guide- Part B

An overview of concepts and terms that will be on Part B of the test! AC 310 Study Guide for Test 1, Part B

Study Guide
University of Alabama
Ac 310 - Finan Report Analy Bus Activ I
Finan Report Analy Bus Activ I Documents

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AC 310 7th Edition Exam # 1 Study Guide Lectures: 1 - 5 Lecture 1 (January 8) Objectives of Financial Accounting Financial reporting should provide information that: A. Is useful to present and potential investors and creditors and other users in making rational investment, credit and similar decisions B. Helps present and potential investors and creditors and other users in assessing the amounts, timing, and uncertainty of prospective cash receipts C. Clearly portrays the economic resources of an enterprise, the claims to those resources, and the effects of transactions, events, and circumstances that change its resources and claims to those resources Role of the Auditor: Auditors serve as independent intermediaries to help ensure that management has appropriately applied U.S. GAAP in preparing the company’s financial statements. Underlying Assumptions: Economic entity: All economic events identified with a particular economic entity Going concern: Business entity will continue to operate indefinitely Periodicity: Life of company is divided into time periods to provide timely information Monetary unit: Financial statements are measured in a particular monetary unit (like the US dollar) Lecture 2 (January 13) Rules for Adjusting Entries: 1.End of Accounting Period: Adjusting entries always occur at the end of an accounting period (monthly, quarterly, annually) 2. Balance Sheet and Income Statement: Adjusting entries always involves a balance sheet AND an Income Statement account 3. NO CASH: The cash account is never used with Adjusting Entries. If you are using cash then it is not an adjusting entry 4. Repeat 1-3: Always remember rules 1-3 and that DEBITS = CREDITS with any journal entry. Lecture 3 (January 15) Key Take-Aways from Chapter 4: 1.Components of the Income Statement 2. Prepare a multi-step income statement 3. Intraperiod tax allocation 4. Comprehensive income and statement of comprehensive income 5. Earnings per share calculations and statement of retained earnings

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