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BUSA7 Managerial Accounting FINAL EXAM STUDY GUIDE

The final will be comprehensive covering Chapters 1 – 15 with more emphasis placed on the material covered after Midterm 2. So WHAT SHOULD YOU KNOW???

Chapter 1 - Introduction to Accounting and Business

• The Accounting equation because everybody knows ASSETS = LIABILITIES + STOCKHOLDER’S EQUITY, right?

• Types of Businesses • Describe the financial statements of a corporation and explain how they interrelate like which

order they should be completed in. • Sarbanes Oxley • Who is GAAP and what do they do? • What is a CPA? • Ethics in Accounting

Chapter 2 - Analyzing Transactions

• Characteristics of an account and a chart of accounts • What are the Normal Balances for accounts • T-Accounts • Journalizing and posting of transactions to accounts. • Unadjusted trial balance • Horizontal analysis

Chapter 3 - The Adjusting Process

• What is the adjusting process • Journal entries for accounts requiring adjustment: Prepaid expenses, Unearned revenues, Accrued

revenues, Accrued expenses • Adjusted trial balance • Yep you need to know how to do the Vertical analysis too!

Chapter 4 - Completing the Accounting Cycle

• Closing entries • What is liquidity and solvency?

Chapter 5 - Accounting for Merchandising Businesses

• Credit terms • Shipping Terms

The semester is winding down, wow can you believe it. YOU DID IT!!! Now you have just one more milestone to accomplish, the final. I have 100% confidence that you will do well if you review the book material, your notes, and your homework by using this study guide as a base.

Professor Bowers

BUSA7 Managerial Accounting FINAL EXAM STUDY GUIDE

• The financial statements of a merchandising business which includes the Cost of Merchandise

Sold on the Income Statement • Describe the adjusting and closing process for a merchandising business • Multiple Step Income Statement

Chapter 6 - Inventories

• LIFO, FIFO, and Weighted Average • Perpetual Method • How do you safeguard inventory: purchase orders, receiving report, and vendor’s invoice

Chapter 7 - Sarbanes-Oxley, Internal Control, Cash

• Sarbanes-Oxley Act • Controlling Cash Receipts • Bank Reconciliation

Chapter 8 - Receivables

• Accounts Receivables • Notes Receivables and characteristics of Notes Receivable: Maker, Payee, Face Amount,

Issuance Date, Due Date, Term, Interest Rate • Other Receivables • Uncollectible Receivables • Direct Write-of Method/Allowance Method • Estimating Collectibles: Percent of Sales Method, and Analysis of Receivable

Chapter 9 - Fixed Assets and Intangible Assets

• Cost of Fixed Assets • Capital and Revenue Expenditures • Depreciation: Straight Line, Units of Output, and Double Declining • What is MACRS • Amortization • Depletion

Chapter 10 - Current Liabilities and Payroll

• Accounts Payable • Short Term Notes Payable • Employee Deductions • Employee Fringe Benefits

Professor Bowers

BUSA7 Managerial Accounting FINAL EXAM STUDY GUIDE

Chapter 11 - Corporations: Organization, Stock Transactions, and Dividends

• Nature of the corporate form of organization • Describe and illustrate the characteristics of stock, classes of stock, and entries for issuing stock • Describe and illustrate the accounting for cash dividends and stock dividends • Describe and illustrate the accounting for treasury stock transactions • What is a stock split?

Chapter 12 - Long-Term Liabilities: Bonds and Notes

• Describe the characteristics and terminology of bonds payable • Compute the potential impact of long-term borrowing on earnings per share

Chapter 13 - Investments and Fair Value Accounting

• What are debt and equity investments • Why companies invest in debt and equity securities. • Accounting for debt and equity investments.

o <20% Ownership o Between 20%-50% o >50% Ownership

Chapter 14 - Statement of Cash Flows

• Describe the cash flow activities reported in the statement of cash flows. Knowing the types of Statement of Cash Flows: Indirect and Direct

• Prepare a statement of cash flows, using the indirect method.

Chapter 15 - Financial Statement Analysis • Know how to complete a comparative Income Statement and Balance Sheet • Use financial statement analysis to assess the solvency of a business. • Use financial statement analysis to assess the profitability of a business. • Describe the contents of corporate annual reports.

Professor Bowers

BUSA7 Managerial Accounting FINAL EXAM STUDY GUIDE

FORMULAS

Ratio of Sales to Assets = Sales

Average Total Assets

Fixed Asset Turnover Ratio = Sales

Average Book Value of Fixed Assets

Number of Days’ Sales in Receivables

Average Accounts Receivable Average Daily Sales =

Average Daily Sales Sales

365 Days =

Inventory Turnover = Cost of Merchandise Sold

Average Inventory

Number of Days’ Sales in Inventory

Average Inventory Average Daily Cost of Goods Sold =

Average Daily Cost of Goods Sold

Sales 365 Days =

Professor Bowers

BUSA7 Managerial Accounting FINAL EXAM STUDY GUIDE

Ratio of Fixed Assets to Long-Term Liabilities

Fixed Assets (net) Long-Term Liabilities =

Ratio of Liabilities to Stockholders’ Equity

Total Liabilities Total Stockholders’ Equity =

Ratio of Sales to Assets = Sales

Average Total Assets (excluding long-term investments)

Earnings per Share (EPS) on Common Stock

Net Income – Preferred Dividends Average Number of

Common Shares Outstanding =

Price-Earnings (P/E) Ratio Market Price per Share of Common Stock

Earnings per Share on Common Stock =

Dividend per Share = Dividends on Common Stock

Shares of Common Stock Outstanding

Professor Bowers