ACCT3401 Final Exam Notes Chapter 1 Sources of GAAP included in the ASC FASB Conceptual Framework, specifically SFAC

C 5 and 6: Be able to recognize assumptions, principles and constraints and know basic definitions of elements of the financial statements. Chapter 2 Adjusting Entries: Know how to make basic adjusting entries Prepayments Cash Flow before expense incurred (prepaid expenses) or revenue recognized (unearned revenue). Standard Method v. Expedient Method. Accruals Cash Flow after expense incurred (accrued liabilities) or revenue recognized (accrued receivables). Closing Entries Close temporary accounts found on income statement to Ret. Earnings Chapter 3 Know main types of balance sheet classifications and how various accounts are classified (e.g., cash equivalents are current assets). Know common financial statement disclosures summary of significant accounting policies, subsequent events, related party transactions. 4 types of auditors opinions. Liquidity ratios: current (working capital) ratio and acid-test or quick ratio. Chapter 4 Treatment of restructuring costs under SFAS 146 Know how to account for Discontinued Operations and Extraordinary Items. Extraordinary Items: Criteria - Unusual and Infrequent Discontinued Op.s 2 parts: 1) Results of operations; and 2) G(L) on disposal, including impairment loss. Change in Accounting Principle Generally, retrospective change is made. Contrast with change in accounting estimate (prospective) and prior period adjustments . EPS: On which items do you need to report an EPS # on face of income statement? Statement of Cash Flows: Know what constitutes an operating activity, an investing activity and a financing activity. Operating activities = Income Statement (net income + non-cash expenses) plus/minus changes in Current Assets and Current Liabilities. Investing Activities = Changes in Long-term Assets. Financing Activities = Changes in Long-Term Liabilities & Equity

Chapter 5 Realization principle for revenue recognition. Calculation of realized and deferred gross profit under the installment method. Know basics of 2 long-term contract methods of reporting - % complete and completed contract (e.g., how to compute gross profit reported annually for profitable contracts and for contracts which become loss contracts and how the gross profit is recorded). Chapter 6 Know basic principles of computing present values and future values of a single amount and an annuity. Chapter 7 Bank reconciliation Accounting for bad debts under an income statement ( % of credit sales) approach and a balance sheet (aging schedule) approach. Gross and net methods of accounting for sales discounts and purchase discounts. Assigning & pledging A/Rs versus factoring (nonrecourse and recourse). Know how to account for factoring transactions and discounted notes. Chapter 8 What items are included in inventory? Contrast periodic and perpetual inventory systems. Be able to compute ending inventory under FIFO, LIFO, and Weighted Average. Know how to do a basic DV LIFO problem. Chapter 9 Know how to compute market and ending inventory under LCM. Be able to estimate ending inventory under the gross profit method and the basics of the retail method. Know impact of errors in inventory. Chapter 13 Be able to recognize various types of current liabilities. Know how to determine the balance in the estimated warranty liability account. Know when loss contingencies need to be accrued and/or disclosed.