ACCT 2101 1st EditionExam # 1 Study Guide Lectures: 1 - 6Lecture 1 (January 6)Introduction to the Class- Name tent must be placed on desk every day- The course binder must be purchased for $20- T-square and the course binder has previous exams to be used as practice- Post Em is where grades can be viewed- Graded items can be picked up in the bins in the Undergraduate Student Commons on thefirst floor of the Business Building- One quiz will be dropped in computing Quiz Average- Zero homework assignments will be dropped in computing Homework Average- Two class exercises will be dropped in computing Class Exercise Average- You will be asked to leave the class for the day if:o You talk in class at inappropriate timeso If you work on other courses or text while in classo If you put your head on your desk- To request a re-grade, jot a note, attach a solution, and submit to instructor- A 75 or higher must be achieved on the final exam to retain a grade of “A” no matter what your course average is going into the final exam- Laptops are not allowed in class- The final exam will take place on Thursday, April 30 at 11:30 AMLecture 2 (January 8) - A private company is one that does not sell shares of stock (ownership) to outside parties- A public company is one that does sell shares of stock to outside parties through organized stock exchanges- The SEC is the Securities and Exchange Commission. It is the governing regulating body established in 1934 that monitors the stock market and enforces laws regulating the saleof stocks and bonds- A 10-K is an annual report required by the U.S. Securities and Exchange Commission (SEC),that gives a comprehensive summary of a company's financial performance- A 10-Q is a comprehensive report of a company's performance that must be submitted quarterly by all public companies to the Securities and Exchange Commission.- The MD&A is the Management’s Discussion and Analysis that is a required section of financial reports of public companies in which management analyzes the results of operations and cash flows for the periods presented - the company also talks about theirplans for the future and predicts how they will do.o The Safe Harbor Clause is a statement on the MD&A that says that the firm won'tbe penalized for not meeting the expectations- The four (or five) basic financial statements are the Balance Sheet (assets/liabilities), Income Statement (combined with Comprehensive Income Statement), Statement of Stockholders’ Equity, and Statement of Cash Flows- Some alternate names for the Income Statement are the Statement of Earnings, Statements of Operations, and Statement of Profits and Loss.- Some alternate names for Net Revenues are Sales, Net Sales, and Revenues. o This number is the first number on the Income Statement- Some alternate names for Net Income are Net Earnings and Net Profit. o This number is the “bottom line” of the Income Statement- An alternate name for the Balance Sheet is the Statement of Financial Position- There are no alternate names for the Statement of Cash FlowsLecture 3 (January 13) - The Notes to the Financial Statements section offers more information about the documents and helps to expand our understanding of the items- The Auditor’s Report tells us the audit firm’s opinion based on the statements. It tells us if the reports represent the company fairly so the reader knows if they should invest in that company.- The goal of the IASB (International Accounting Standards Board) is to have worldwide acceptance of a set of international financial reporting standards- A proxy statement contains information in voting procedures, information on executive compensation, and information on the breakdown of audit and nonaudit fees paid to theaudit firm.- Accrual basis of accounting is recognition of revenue in the accounting period when the sale is made rather than when cash is received in order to match expenses with revenue in the appropriate account periodLecture 4 (January 15) - An account is an element in a system used to classify and summarize measurements of business activity- A debit is an entry that is placed on the left side of the T-accounto Also called charge- A credit is an entry that is placed on the right side of the T-account- Don’t think about debits/credits as “good” or “bad”- Double entry means that the debits equal the credits in every entry- Assets = Liabilities + Stockholders’ Equity- Debits = Credits- Asset Accountso Debit for increaseo Credit for decrease- Liability Accountso Debit for decreaseo Credit for increase- Paid-in Capitalo Debit for decreaseo Credit for increase- Retained Earnings (profits of earnings that the company has generated but not distributedto shareholders)o Debit for decreaseo Credit for increase- Expenseso Debit for increaseo Credit for decrease- Revenueso Debit for decreaseo Credit for increaseLecture 5 (January 20) - Ledger (General Ledger) is the complete collection of all the accounts of the company- Balance Sheet accounts (assets, liabilities, and stockholders’ equity) are called “real accounts” because they are not subclassifications of other accounts- Income Statements (revenues & expenses) are called “nominal accounts” because they temporarily contain information that will become part of retained earnings- Chart of Accounts is the complete listing of account titles and numberso The accounts are usually systematically numbered- Journal is the chronological record of business transactionso A journey entry shows all of the effects of a business transaction expressed in debits and creditso A transaction is recorded in a journal before it is entered in the ledger accountso All journey entries should be presented following these basic rules: All debits on top All credits on bottom and indented This applies to both the account name and the dollar amount of the debitor credit Leave off dollar signs – they are unnecessarily- Journalizing – entering a transaction in a journal- Posting – recording in the ledger the information contained in the journal- Cross-indexing – placing of (1) account number of the ledger account in the journal and (2) general journal page number in the ledger account- Compound journal entry – a journal entry with more than one debit and/or credit- Trial balance – the listing of the ledger accounts and their debit or credit balanceso This listing verifies that the debits equal the creditsLecture 6