1. HFT 2403 Financial Accounting Exam 1 Review

2. Chapter 1  Definitions of accounting principles –Cost Principle –Business Entity –Continuity of the Business Unit (Going Concern) –Unit of Measurement –Objective Evidence –Full Disclosure –Consistency –Matching –Conservatism –Materiality

3. Chapter 1  Fundamental Accounting Equation –Assets = Liabilities + Equity –Assets – Liabilities = Equity –Assets – Equity = Liabilities –Equity = Permanent + Temporary Owners Equity –Temporary Owners Equity = Revenue - Expenses

4. Chapter 1  Advantages & Disadvantages of: –Sole Proprietorship –Partnership –Corporation –S Corporation

5. Chapter 2  Debit vs. Credit (Left vs. Right)  Types of accounts and their definitions – Asset, Liability, Equity, Revenue, Expense (See pp 42 - 44)  Normal Balances  Assets – Increase by debit, decrease by credit  Liability & Equity - Increase by credit, decrease by debit  Trial Balance

6. Chapter 3  What is an adjusting entry?  Definition of depreciation  Accrual vs. cash basis accounting  Definition of an accrual entry vs. a deferral entry  Effects on financial statements for failing to prepare entries (see chart on p 89)

7. Chapter 4  Nominal vs Permanent Accounts  Closing Account Balances to Income Summary  Preparing a trial balance  Posting Adjusting Entries and Completing a Worksheet with Post Closing Trial Balance (See handout problem)

8. Given the following information: Prepare a Trial Balance Worksheet  Cash 10,000  Accts Recv 25,000  Inventory 35,000  Accts Payb 27,000  Wages Payb 6,000  Equity 35,000  Room Rev 210,000  Room Wage 65,000  Room Exp 15,000  Admin Exp 10,000  Sales Exp 27,000  Utilities 66,000  Interest 25,000

9. Final Note Bring a calculator!!! No cell phones. Scantrons not required You may want to use pencil rather than pen Questions?