Study Hall Exam 1: Make sure you cover all of these concepts, equations, and rules, including how to apply them in numerical problems. I strongly encourage you to work on the Accounting Cycle Project (the Extra Credit Assignment) as a strong preparation for this exam. When you work on the HW and Quizzes, they will give you a working familiarity with the material. For successful learning which is reflected in strong exam scores, you will need to master the concepts and their application. Here are some areas of focus with suggestions on how to master the material! Concept definitions: (Create Flashcards to master these!) i)Assets (including which financial statement it can be found on) ii)Liabilities (including which financial statement it can be found on) iii)Shareholders Equity (including which financial statement it can be found on) iv)Revenues (including which financial statement it can be found on) v)Expenses (including which financial statement it can be found on) vi)Dividends (including which financial statement it can be found on) vii)Accounts Receivable ("on account" sales or sales on credit terms) (including which financial statement it can be found on) viii) Accounts Payable ("on account" purchases or purchases on credit terms) (including which financial statement it can be found on) ix)Accounting Cycle x)Characteristics of Financial Statements xi)Trial Balance xii)Accrual Basis of Accounting xiii) Cash Basis of Accounting xiv) Adjusting Entries and their characteristics xv)Unearned Revenues (including which financial statement it can be found on) xvi) Prepaid Expenses (including which financial statement it can be found on) Relationships: (Create your own flowcharts showing the interrelationships between these for mastery) Think of the relationships between each of these equations and how and where they show up in the financial statements. i)Fundamental Accounting Equation ii)Expanded Accounting Equation iii)Income Statement iv)Balance Sheet v)Statement of Retained Earnings Rules: (Create your own acronyms or diagrams or flowcharts to memorize these) 1)Debits: a)Left hand side of the accounting equation. b)All accounts in this category are increased by debits and decreased by credits - as a result, all these accounts carry a normal debit balance - this category includes all assets, all expenses and dividends.
2)Credits: a)Right hand side of the accounting equation. b)All accounts in this category (exceptions are expenses and dividends) are increased by credits and decreased by debits - as a result, all these accounts carry a normal credit balance (except expenses and dividends which follow the rules for assets, and carry normal debit balances). This category includes all liabilities, and shareholders equity accounts excluding expenses and dividends). 3)T- accounts - Post debits always on the left hand side of the T- account and post credits always on the right hand side of the T- account. Ending balances of T- accounts (Remember that it's the same set of steps no matter whether it is an asset, or liability, or equity, or revenue or expense account - Use this also to determine the normal balances of any account) - this will also help you predict which account it is by just looking at whether it is a debit or a credit balance. i)Determine the sum of all the debits and set it aside. ii)Determine the sum of all the credits and set it aside. iii)The ending balance of the T-account is the difference between these two sums and is presented on the side that is greater. For example, if the sum of the debits is $400 and the sum of the credits is $600, the ending balance of this T-account is $200 and is referred to as $200 (cr) because the sum of the credits exceeds the sum of the debits. This account is said to carry a credit balance.
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