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    Acc 500 Exam 1 Actual Review

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    ally
    This document provides an overview and outline of topics covered in an ACC 500 exam, including: the three categories of business activities (operating, investing, financing); the transition to international accounting standards; the four basic financial statements and their components; inventory costing methods; adjusting entries; allowance for bad debts; revenue recognition; and definitions of key ratios like ROA and ROE. Key accounting concepts covered include financial statement analysis, inventory valuation, accounts receivable, adjusting entries, and calculations related to stocks, debt, dividends, and terminology.

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    Acc 500 Exam 1 Actual Review

    Uploaded by

    ally
    50 views5 pages
    This document provides an overview and outline of topics covered in an ACC 500 exam, including: the three categories of business activities (operating, investing, financing); the transition to international accounting standards; the four basic financial statements and their components; inventory costing methods; adjusting entries; allowance for bad debts; revenue recognition; and definitions of key ratios like ROA and ROE. Key accounting concepts covered include financial statement analysis, inventory valuation, accounts receivable, adjusting entries, and calculations related to stocks, debt, dividends, and terminology.

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    Acc 500 Exam 1 Actual review

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    This document provides an overview and outline of topics covered in an ACC 500 exam, including: the three categories of business activities (operating, investing, financing); the transition to international accounting standards; the four basic financial statements and their components; inventory costing methods; adjusting entries; allowance for bad debts; revenue recognition; and definitions of key ratios like ROA and ROE. Key accounting concepts covered include financial statement analysis, inventory valuation, accounts receivable, adjusting entries, and calculations related to stocks, debt, dividends, and terminology.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    50 views5 pages

    Acc 500 Exam 1 Actual Review

    Uploaded by

    ally
    This document provides an overview and outline of topics covered in an ACC 500 exam, including: the three categories of business activities (operating, investing, financing); the transition to international accounting standards; the four basic financial statements and their components; inventory costing methods; adjusting entries; allowance for bad debts; revenue recognition; and definitions of key ratios like ROA and ROE. Key accounting concepts covered include financial statement analysis, inventory valuation, accounts receivable, adjusting entries, and calculations related to stocks, debt, dividends, and terminology.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    Acc 500 Exam 1 Actual review

    Module 1: Financial Accounting


     Business Activities
    o 1. Operating activities
     Companies hire and train employees
     Manufacture products
     Deliver services
     Market and sell products
     Manage after-sale customr support
    o 2. Investing activities
     Assets with long term value
     Investing in other companies
     Acquiring land
     Acquiring building and equiptment
     New technology
     Growing the business with new products and services
     Acquiring other companies to expand into new markets
    o Financing activities
     Paying back debt
     Companies raise cash to fund the operating and investing activities
     Selling stock to equity investors
     Borrowing from banks and lenders
     Dividends
     US transitioning to International accounting standards board would make
    o Comparable global accounting standards
     Improve quality of finanacial reports
     Benefit those making investing decisions
     Reduce costs
     Make world wide capital markets more efficient
    o IASB oversees development of IFRS
    o IASB and FASB operate independently and work coorperatively
    o IFRS and GAAP are more alike

    Financial statement analysis


     Preparing financial statements
     Analyzing impact of transactions on financial statement
     Order of financial statements
    o Income statement
    o Statement of stockholders equity
    o Balance sheet
    o Statement of cash flows
     Order of three items of statement of cash flow
    o operating
    o investing
    o financing
     What is on the financial statements and what do they tell us

    Inventory
     What goes in
     Estimates
     Returns
     Title transfer
    o FOB Shipping and destination
     Cost flow assumptions
    Assets
     Long term PPE
    o How does it turn into an expense
    o Straight line depreciation

    Profitability analysis (some ROE)


     ROA
    o Companies profitability must be assed relative to the size of asset investments
    o High roa is good
    o Low roa is bad
    o Profitability margin
     Relates profits to sales
     Net income earned from each sales dollar
    o Asset turnover (productivity)
     Relates sales to assets
     Sales generated by each dollar of assets
     Management wants to maximize asset prodctivity to achieve the highest
    possible sales level for a given level of assets
    o High margin and low turnover
     High margin means barriers to entry and able to reduce competition
     Low productivity or turn over means that assets like marketable
    securities and intangible assets do not generate sales so productivity is
    decreased by inflated assets
    o low margin high turnover
     low margin- difficult to differentiate products so prices are lower
     high turn over- need to maintain high turnover to keep good ROA, pay
    close attention to inventory and PPE
     rarely have accouts recievable
    o high performance
     high margin and high productivity
     must manage both income statement and balance sheet
     ROE
    o Company’ earnings are compared to level of stockholder investment
    o Net income (-) not controlling interest
    o Reflects the return to stock holders
     How did firm do based on ROE ratio
    o Example: “Profitability increased because assets went down meaning they used
    them more effectively”
     Difference between ROA and ROE
    o ROA reflects return to entire company, ROE reflects return to stock holders

    o ROE
     What does ratio mean
     How did firm do based on ratio
     Ex: “Profitability increased because assets went down meaning they used
    them more effectively”

    Module 3 ajusting enteries


     Calculating adjusting enteries
     Types of adjusting enteries
     Impact of adjusting enteries on accounting equation
    Module 7
     Inventory costing methods
    o FIFO
    o LIFO
    o Weighted average
    o Highest income from inventory costing methods
     Warrantie costs

    Module 5
     Allowance for bad debt
     Revenue recognition
    Module 3
     Retained earning reconciliation

     Accounts recievanble
    o Writing of AR
    o How we deal with AR
    o Allowances for AR
    o 3 ways for estimating allowances for AR
     Percentage of sales
     Percentage of AR
     Aging of AR
     How are the three methods different
     Ex: 2 methods besides sales apply percentage and comes ending
    allowance then back to adjusting

    Time value of money


     Packet

    Closing enteries
     RED
     What do we close and how

    Stocks
     Treasury stock
     Split stock
     Stock dividend
     Additional paid in capital

    Debt
     What goes into debt ratings
     Factors that impact companies debt ratings

    Dividends
     Calculations
     How do they impact financial statements
     What is there behavior
    o Increase with debit

    Terminology
     Assets that can be liquidated to cash easily

    What the ratios mean


     ROA
    o Companies profitability must be assed relative to the size of asset investments
    o High roa is good
    o Low roa is bad
    o Profitability margin
     Relates profits to sales
     Net income earned from each sales dollar
    o Asset turnover (productivity)
     Relates sales to assets
     Sales generated by each dollar of assets
     Management wants to maximize asset prodctivity to achieve the highest
    possible sales level for a given level of assets
    o High margin and low turnover
     High margin means barriers to entry and able to reduce competition
     Low productivity or turn over means that assets like marketable
    securities and intangible assets do not generate sales so productivity is
    decreased by inflated assets
    o low margin high turnover
     low margin- difficult to differentiate products so prices are lower
     high turn over- need to maintain high turnover to keep good ROA, pay
    close attention to inventory and PPE
     rarely have accouts recievable
    o high performance
     high margin and high productivity
     must manage both income statement and balance sheet
     ROE
    o Company’ earnings are compared to level of stockholder investment
    o Reflects the return to stock holders
     Difference between ROA and ROE
    o ROA reflects return to entire company, ROE reflects return to stock holders
     Financial leverage
     PPE

     Working capital
     Net income
     interest

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