Accounting 2200 Midterm 1 Study Guide INTRODUCTION 1 What are the 3 types of organizational options for businesses and what sets them apart 2 What are the 2 financing options for business and what are their defining factors 3 What is a definition of accounting 4 What are the two types of accounting What purposes do they serve Who do they benefit 5 What does GAAP stand for What is it What purpose does it serve What are the 2 organizations from which GAAP comes from What are their defining characteristics 6 What is the purpose of financial audits Who do they protect 7 What must publicly traded companies provide to their shareholders annually What are its 4 components 8 What does IFRS stand for Who developed it What is its significance for the U S FINANCIAL STATEMENTS Financial Statements Balance Sheet Assets Liabilities Equity Income Statement Long Term Assets Short Term Assets Current Liabilities Long Term Liabilities Revenue s Expenses Statement of Owners Equity Statement of Cash Flows Retained Earnings Common Stock Contributed Capital Cash Inflows Cash Outflows Intangibles Trademark Patent Copyright PPE Land Equipm ents Buildin gs Cash Accoutns Recievable Inventory Supplies LT Notes Payable Mortgage Payable Bonds Payable Accounts Payable Short term Notes Payable Salaries Payable Income Taxes Payable Utilities Payable Financial StatementsBalance SheetAssetsLong Term AssetsPPE LandEquipmentsBuildingsIntangibles TrademarkPatentCopyrightShort Term AssetsCashAccoutns RecievableInventorySuppliesLiabilitiesCurrent LiabilitiesAccounts PayableShort term Notes PayableSalaries PayableIncome Taxes PayableUtilities PayableLong Term LiabilitiesLT Notes PayableMortgage PayableBonds PayableEquityIncome StatementRevenuesExpensesStatement of Owners EquityRetained EarningsCommon Stock Contributed Capital Statement of Cash FlowsCash InflowsCash Outflows Equations Fundamental Accounting Equation Equity Liabilities Assets Income Statement Traditional Sales Revenue Cost of Goods Sold Gross Profit Other Revenues Other Expenses Net Income Contributed Capital Corporation Beginning Balance Jan 1 Additional Sales of CS Ending Contributed Capital Retained Earnings Corporation Beginning Balance Jan 1 Net Income Dividends Ending Retained Earnings Dec 31 Contributed Capital Sole Proprietor Beginning Balance Jan 1 Additional Investments by Owner Net Income Withdrawals by Owners Ending Balance Dec 31 COST BEHAVIOR 1 What are the 2 assumptions for cost behavior 2 When is the High Low Method needed Equations High Low Method Change in Cost Change in Activity Level Contribution Ratio Contribution Margin Sales Revenue Income Statement Contribution Sales Revenue Variable Costs Contribution Margin Fixed Costs Net Income COST VOLUME PROFIT ANALYSIS 1 What are the 4 elements of CVP 2 What is the verbal interpretation of Margin of Safety 3 What is the verbal interpretation of Operating Leverage Equations Variable Cost Ratio Variable Cost or Variable Cost per unit Sales Revenue Selling Price per unit Margin of Safety Actual Sales Break Even Sales Margin of Safety Operating Leverage Contribution Margin Net Income Sales Mix Calculations Sales Mix CM per unit Package CM per unit Package CM per unit Package Units Fixed Costs Net Income Solve for Package units then multiply by respective sales mix ratio to find units sold
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