FINANCIAL ACCOUNTING ACT 500 SPRING 2014 STUDY GUIDE EXAM I CHAPTERS 1 TO 5 The primary purpose of the balance sheet Know how to compute retained earnings given other elements of the accounting equation What the statement of cash flows reports Financial accounting primarily provides information for who Typical assets of a business enterprise Group that has primary responsibility for information contained in financial statements Know the continuity assumption How assets are listed on the balance sheet (in what order) Know which assets would be current assets The effect on the accounting equation of an investment of cash by owners Types of activities that would give rise to recording a transaction Journal entry to record payment of an accounts payable Principle used for recording transactions regarding sales Revenues greater than expenses means………… Expense usually listed last on income statement When revenue should be recognized What accrued expenses represent Prepaid expenses would normally have what kind of balance Difference between equipment and accumulated depreciation equipment is called……….. Relationship between net income and the balance in retained earnings Know calculation to record accrued interest on a note for a part of a year The difference between unadjusted trial balance and adjusted trial balance Primary purpose of the statement of cash flows The phrase “At December 31, 2014” would be used in the heading of what statement The primary purpose of the Financial Accounting Standards Board

FINANCIAL ACCOUNTING ACT 500 SPRING 2014 STUDY GUIDE EXAM I CHAPTERS 1 TO 5 Criteria used to determine whether an item is extraordinary Given a fact pattern of net sales and expenses be able to compute income from operations (know which items would not be included in operations) Know how to compute gross profit percentage Know which items would not be reported as