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Midterm

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**preview**shows half of the first page. to view the full**2 pages of the document.**ACC 100 - BUSINESS CYCLE ACCOUNTING

MIDTERM GUIDANCE

CONCEPTS TO KNOW:

•Understand the basic four financial statements, what they report, how they are

useful and how they are inter-connected.

•Understand the debit-credit framework and know how to make basic journal

entries.

•Know how to make adjusting entries for accruals and deferrals and why they are

important.

•Know the difference between cash and accrual accounting and what GAAP

requires.

•Understand the purpose of and methods for making closing entries and be able to

distinguish these from adjusting entries (i.e. what different purposes do closing

entries and adjusting entries serve?).

•Be able to name and describe each stage of the Accounting Cycle and know the

order in which they occur and how they are inter-related.

•Know the general kinds of financial ratios (Profitability, Liquidity, Solvency),

what they are used for and who uses them.

•Be sure to understand the formulas for all financial ratios and where to find the

inputs (i.e. which statements or other sources).

•Know how to compare the ratios of two or more different companies and

determine which company is performing better with respect to the particular ratio.

•Be able to explain the fundamental conceptual differences between ratios that are

closely related (i.e. current vs. quick ratio or return on assets vs. return on equity).

•Understand why ratio analysis is used in lieu of just analyzing one financial

metric by itself.

•Understand time series, vertical and horizontal analysis as well as indexes.

•Understand how accounting information gets used on Wall Street and among the

investing public.

•Understand the basic principles of Internal Control and how to do a simple bank

reconciliation.

TEST FORMAT:

•First Part: Multiple Choice / Short Answer Questions

•Second Part: Longer calculation, analysis and conceptual questions

•Test is closed book, closed notes.

•A formula sheet will be provided for ratios

•Please bring a scantron and pencil for the multiple choice and a calculator.

•Test will be 2 hours in length (we will discuss Budgeting afterwards)

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