CMHR 405
STUDENT MIDTERM EXAM INFORMATION SHEET CCACC100 - INTRODUCTORY FINANCIAL ACCOUNTING STUDENT INFORAMTION SHEET: This sheet is provided as an additional resource for students who are studying for the Midterm Exam in CACC100. NOTE: this sheet is for information purposes ONLY. This sheet does not, in any way, indicate the types of questions that will be on the Midterm Exam. This sheet DOES provide students with one possible method to study for the Midterm Exam. Students must decide individually on the method that works best for them. HOW SHOULD I APPROACH STUDYING FOR THE MIDTERM EXAM? Students often ask how to study for a Midterm Exam at university. Here are some suggestions: 1. Refer to your course outline. The outline lists the page numbers that will be covered AND indicates the level of knowledge needed. A copy of the important areas of the outline for the course is attached. Note that the level of knowledge required differs for different learning objectives. 2. Re-do the in-class demo questions which are listed on the course outline. These are the concepts that are at the Understand/Master level. You must be able to both understand the calculation as well as explain what the calculations mean (theory). 3. Do additional exercises and problems. The course outline clearly indicates the Learning Objectives (LO) that are at the SCAN, UNDERSTAND and MASTER level. Using this information you can choose exercises and problems from the back of the chapter that test those concepts. I have attached a list of additional questions. AGAIN, please note that these do not, in any way, indicate what will be on the Midterm Exam. However, they provide students with additional practice and, as we all know, practice helps you to master concepts. NOTE: the solutions to all the ODD numbered questions are posted on Blackboard, under Course Material. 4. Remember that theory is 50% of the Midterm Exam. I have attached a list of possible theory style questions. Please note that these theory questions do not, in any way, indicate what will be on the Midterm Exam. Instead, these questions will help students to realize the variety of theory questions that can be used on the Midterm Exam. These also provide students with practice on how to answer theory questions. NOTE: solutions to the theory questions are NOT provided. These theory questions are developed from the content of the textbook and answers can be derived from the textbook.
CONCLUSION: It is the student’s responsibility to be prepared for the Midterm Exam. It is important that you have read both the Student Exam Procedures. Note that this information is available on Blackboard, under Midterms And Final Exams. REMEMBER: accounting is like anything else - it requires PRACTICE. The more questions you do the more familiar you become with the concepts and the better your level of understanding. THEORY: At the end of every chapter there are Questions. These Questions are also a good resource for students looking for theory questions. The solution to these Questions are available in the solutions file that is posted on Blackboard, under Course Materials.
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Midterm Coverage:
Topics & Learning Objectives Chapter 1 Accounting Communication-An Introduction Learning Objectives: 1, 2: Scan 3, 5: Understand 4: Master Read page 1 to 21 Chapter 2 Financial Statements and the Annual Report Learning Objectives 1: Scan 5: Understand 2, 3, 4: Master Read page 50 to 67 Chapter 3 Processing Accounting Information Learning Objectives 1: Understand 2: Master Read page 92 to 101
In-Class Demo Questions: Chapter 1 LO1: LO2: LO3: E1-12 LO4: E1-4, P1-5 LO5: E1-10 Chapter 2 LO1: LO2: LO3: LO4: LO5:
E2-1 P2-3 P2-6 E2-4 E2-5
Chapter 3 LO1: E3-1 LO2: E3-4, P3-2 (Part 1) NOTE: Accounting equation analysis ONLY.
Additional Exercises and Problems Question: 3, 5, 9, 11, 13, 15 Exercises: E1-3, E15, E1-7 Problems: P1-3, P15, P1-3A, P1-5A Questions: 1, 3, 5, 6, 11 Exercises: E2-5, E27 Problems:P2-1, P21A
NOTE: accounting equation analysis ONLY for all questions! Question: 1, 3 Exercises: E3-3, E35, E3-9, E3-15, Problems: P3-1, P33 (1) only, P3-7 (1) only, P3-11 (1) only
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Topics & Learning Objectives Chapter 4 – Part 1 Accrual Accounting, Adjusting entries and Accounting Cycle Learning Objectives 1, 2: Understand 3: Master Read page 146 - 154 (top) Chapter 4 – Part 2 Accrual Accounting, Adjusting entries and Accounting Cycle Learning Objectives 3: Master Read page 154 - 160 Chapter 5 Merchandising Operations Instructor Provided Summary: Master Chapter 5 LO 1, 2, 3: MASTER
In-Class Demo Questions: Chapter 4 – Part 1
Additional Exercises and Problems See below
LO2: E4-23 LO3: E4-2, E4-4, E4-6. E4-7
Chapter 4 – Part 2
Question: 3, 5, 7, 9
LO3: E4-8, E4-12, P4-3
Exercises: 4-1, 4-3, 45, 4-7, 4-9, 4-11, 4-13, 4-25 Problems: 4-1, 4-3, 45, 4-1A, 4-3A, 4-5A
Student Worksheets posted on Blackboard, CONTENT, under Chapter Materials, Chapter 5.
Chapter 5 LO1: E5-1 LO3: E5-6, E5-8 Chapter 6 LO1: E6-13, P6-1 Instructor Provided Additional Questions posted on BLACKBOARD, CONTENT, under Course Materials, Chapter 5
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Additional Theory Questions: Below are listed additional theory questions that you may wish to consider while studying for the midterm exam. Remember that these theory questions are NOT a total list of all theory questions that may be on the midterm exam; however, they may help you to tackle the 50% theory that will be on the midterm exam. Although I have not provided answers to these theory questions, all the answers are available either from the chapter in the textbook OR from the PowerPoint Slides provided. Chapter 1: 1. What are the three different forms of business organizations? What are the advantages and the disadvantages to each of these forms? 2. Define the three business activities of a company and provide examples of each of these activities. 3. What is the purpose of financial accounting? 4. Who are the primary users of accounting information? 5. What is the purpose of each of the financial statements? How are the financial statements interrelated? 6. What is the accounting equation and how is it connected to the financial statements? 7. You are deciding whether to invest in a company shares. Which financial statement would you want to see, and which areas would you be most interested in? 8. What are the assumptions that underlie the financial statements and why are they important? Name all the assumptions and principles and define them. 9. Define the cost principle. Give an example of when the cost principle has been violated. Define the going concern assumption. What other principle is interrelated with the going concern assumption? 10. Define the monetary unit assumption. Give an example of when it has been violated. 11. Define the time period assumption. How is this assumption connected to accrual accounting? 12. What are generally accepted accounting principles? 13. What are the five categories in the financial statements? What are the characteristics or attributes of each of these five categories? Why is an understanding of each of these categories and their characteristics important when creating the financial statements?
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Chapter 2: 1. What is the objective of financial reporting? 2. What makes accounting information useful? List the qualitative characteristics that underlie all financial statements. Define each of the qualitative characteristics. 3. What is depreciation? 4. What is materiality and why is it important for the financial statements? 5. What is the benefit versus cost constraint? How may this affect how a company records transactions? 6. What is a classified balance sheet and why is it important? Why do companies produce classified balance sheets? 7. Define current assets. Define noncurrent assets. Define current liabilities and long-term liabilities. What is shareholders equity? 8. What is the difference between the balance sheet you learned in Chapter 1 and the one you see in Chapter 2? Why would there be a difference? What is the benefit of the balance sheet you see in Chapter 2? 9. What is the purpose of the income statement? Is the income statement for a point in time or a period of time? What is the single step income statement? 10. What is the purpose of the statement of retained earnings? What is included on the statement of retained earnings? 11. What is the purpose of the cash flow? What are the three activities that we will see on the cash flow statement? 12. How are the financial statements interconnected? Which is completed first and why? 13. List the characteristics of the financial statements and define each of them? Why are the Characteristics so important? How do they aid the external users? Chapter 3: 1. What is the difference between an event and a transaction? Which one is recorded on the financial statements and which is not? 2. What is an external vs an internal event? When is an event a transaction? 3. What is the role of source documents in a company?
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Chapter 4 1. When should economic events be recognized in the financial statements? 2. What is the definition of the word recognition in regards to accounting? 3. What is the definition of historical cost? Are financial statements based on historical cost or market value? Be sure to explain why. 4. What unit of measure is used in the financial statements? 5. Describe the cash basis of accounting. What is the drawback of the cash basis accounting? 6. Describe the accrual basis of accounting. Why do financial statements use the accrual basis of accounting? 7. What do the income statement and the statement of cash flows reveal about a business? Compare the income statement and the statement of cash flow – in what way are they similar? In what way are they different? 8. What is the connection between the time period assumption and accrual accounting? 9. How is the accrual basis of accounting connected to adjusting entries? 10. Define adjusting entries. Why are they required? 11. What are the four types of adjusting entries and what are their characteristics/attributes? 12. How would a deposit received from a customer be recorded in the financial statements? What type of adjusting entry would be needed at the end of the year for this deposit? 13. What is straight-line depreciation? How is it calculated? Provide a definition of the account: accumulated depreciation. What financial statement does it show up on? 14. A company takes out a loan at the beginning of the year. Interest and principal are due at maturity. The loan is for 18 months. What type of adjusting entry would be needed at the end of the fiscal year? What would be the impact on the accounting equation of this type of adjusting entry? 15. What is a prepaid expense and what financial statement is it recorded on? 16. For a prepaid adjusting entry, what 2 categories are always affected and how (+ or -)? 17. What is unearned revenue and is it included under Revenues on the income statement? Why or why not?
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Chapter 5 1. What is FOB destination? Who owns inventory while it is in transit if it has been shipped FOB destination? Who pays for the freight? How is the freight recorded in the financial statements when it is paid by the appropriate party? Does it affect the balance sheet only or the balance sheet and income statement? 2. What is FOB shipping point? Who owns the inventory while it is in transit if it has been shipped FOB shipping point? Who pays for the freight? How is the freight recorded in the financial statements when it is paid by the appropriate party? Does it affect the balance sheet only or the balance sheet and income statement? 3. What is the revenue recognition principle and why is it important? What criteria guides accountants as to when revenue should be recognized? 4. Define the matching principle. Why is the matching principle important when considering the recognition of expenses? 5. What is the difference between the single step income statement and the multiple step income statement? What type of company is the multiple step income statement used for? 6. You are selling inventory to a customer. Why would you offer a sales discount? What are the benefits and drawbacks of offering this discount? 7. Define the account sales returns and allowances. Is this account an expense account on the income statement? Why or why not? 8. Define the account sales discounts. Is this account an expense account on the income statement? Why or why not? 9. What is gross profit and how is it calculated? 10. What is the difference between the periodic and perpetual inventory system? Give an example of a company that would use the periodic inventory system and explain why. 11. What type of inventory system, periodic or perpetual, requires an inventory count? What is the purpose of the inventory count under each type of inventory system?
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COURSE SCHEDULE: For each chapter you will see that different levels of comprehension are required for different learning objectives. Note that the learning objectives listed on the course outline are the same learning objectives that are listed at the beginning of every chapter. For example, on page 4 of the textbook you will see that Chapter 1 lists 6 learning objectives. For each chapter, the Course Schedule indicates if you should "Scan", "Understand", or "Master" the related material. These labels indicate the level of comprehension required for each learning objective. A definition of these terms are as follows:
Scan:
Base knowledge of the vocabulary and comprehend the basic concepts.
Understand:
Scan AND application of your knowledge regarding calculations, how the material can be used and how it affects financial decisions.
Master:
Scan AND Understand AND be able to analyze, evaluate, and prepare it for use in financial statements and decision making.
All material is critical to your understanding of accounting and is subject to testing but you should devote more intensive study to the material denoted with an "Understand" and "Master" level.
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CONCLUSION: It is the student’s responsibility to be prepared for the Midterm Exam. It is important that you have read both the Student Exam Procedures. Note that this information is available on Blackboard, under Midterms And Final Exams. REMEMBER: accounting is like anything else - it requires PRACTICE. The more questions you do the more familiar you become with the concepts and the better your level of understanding. THEORY: At the end of every chapter there are Questions. These Questions are also a good resource for students looking for theory questions. The solution to these Questions are available in the solutions file that is posted on Blackboard, under Course Materials.
2
Midterm Coverage:
Topics & Learning Objectives Chapter 1 Accounting Communication-An Introduction Learning Objectives: 1, 2: Scan 3, 5: Understand 4: Master Read page 1 to 21 Chapter 2 Financial Statements and the Annual Report Learning Objectives 1: Scan 5: Understand 2, 3, 4: Master Read page 50 to 67 Chapter 3 Processing Accounting Information Learning Objectives 1: Understand 2: Master Read page 92 to 101
In-Class Demo Questions: Chapter 1 LO1: LO2: LO3: E1-12 LO4: E1-4, P1-5 LO5: E1-10 Chapter 2 LO1: LO2: LO3: LO4: LO5:
E2-1 P2-3 P2-6 E2-4 E2-5
Chapter 3 LO1: E3-1 LO2: E3-4, P3-2 (Part 1) NOTE: Accounting equation analysis ONLY.
Additional Exercises and Problems Question: 3, 5, 9, 11, 13, 15 Exercises: E1-3, E15, E1-7 Problems: P1-3, P15, P1-3A, P1-5A Questions: 1, 3, 5, 6, 11 Exercises: E2-5, E27 Problems:P2-1, P21A
NOTE: accounting equation analysis ONLY for all questions! Question: 1, 3 Exercises: E3-3, E35, E3-9, E3-15, Problems: P3-1, P33 (1) only, P3-7 (1) only, P3-11 (1) only
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Topics & Learning Objectives Chapter 4 – Part 1 Accrual Accounting, Adjusting entries and Accounting Cycle Learning Objectives 1, 2: Understand 3: Master Read page 146 - 154 (top) Chapter 4 – Part 2 Accrual Accounting, Adjusting entries and Accounting Cycle Learning Objectives 3: Master Read page 154 - 160 Chapter 5 Merchandising Operations Instructor Provided Summary: Master Chapter 5 LO 1, 2, 3: MASTER
In-Class Demo Questions: Chapter 4 – Part 1
Additional Exercises and Problems See below
LO2: E4-23 LO3: E4-2, E4-4, E4-6. E4-7
Chapter 4 – Part 2
Question: 3, 5, 7, 9
LO3: E4-8, E4-12, P4-3
Exercises: 4-1, 4-3, 45, 4-7, 4-9, 4-11, 4-13, 4-25 Problems: 4-1, 4-3, 45, 4-1A, 4-3A, 4-5A
Student Worksheets posted on Blackboard, CONTENT, under Chapter Materials, Chapter 5.
Chapter 5 LO1: E5-1 LO3: E5-6, E5-8 Chapter 6 LO1: E6-13, P6-1 Instructor Provided Additional Questions posted on BLACKBOARD, CONTENT, under Course Materials, Chapter 5
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Additional Theory Questions: Below are listed additional theory questions that you may wish to consider while studying for the midterm exam. Remember that these theory questions are NOT a total list of all theory questions that may be on the midterm exam; however, they may help you to tackle the 50% theory that will be on the midterm exam. Although I have not provided answers to these theory questions, all the answers are available either from the chapter in the textbook OR from the PowerPoint Slides provided. Chapter 1: 1. What are the three different forms of business organizations? What are the advantages and the disadvantages to each of these forms? 2. Define the three business activities of a company and provide examples of each of these activities. 3. What is the purpose of financial accounting? 4. Who are the primary users of accounting information? 5. What is the purpose of each of the financial statements? How are the financial statements interrelated? 6. What is the accounting equation and how is it connected to the financial statements? 7. You are deciding whether to invest in a company shares. Which financial statement would you want to see, and which areas would you be most interested in? 8. What are the assumptions that underlie the financial statements and why are they important? Name all the assumptions and principles and define them. 9. Define the cost principle. Give an example of when the cost principle has been violated. Define the going concern assumption. What other principle is interrelated with the going concern assumption? 10. Define the monetary unit assumption. Give an example of when it has been violated. 11. Define the time period assumption. How is this assumption connected to accrual accounting? 12. What are generally accepted accounting principles? 13. What are the five categories in the financial statements? What are the characteristics or attributes of each of these five categories? Why is an understanding of each of these categories and their characteristics important when creating the financial statements?
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Chapter 2: 1. What is the objective of financial reporting? 2. What makes accounting information useful? List the qualitative characteristics that underlie all financial statements. Define each of the qualitative characteristics. 3. What is depreciation? 4. What is materiality and why is it important for the financial statements? 5. What is the benefit versus cost constraint? How may this affect how a company records transactions? 6. What is a classified balance sheet and why is it important? Why do companies produce classified balance sheets? 7. Define current assets. Define noncurrent assets. Define current liabilities and long-term liabilities. What is shareholders equity? 8. What is the difference between the balance sheet you learned in Chapter 1 and the one you see in Chapter 2? Why would there be a difference? What is the benefit of the balance sheet you see in Chapter 2? 9. What is the purpose of the income statement? Is the income statement for a point in time or a period of time? What is the single step income statement? 10. What is the purpose of the statement of retained earnings? What is included on the statement of retained earnings? 11. What is the purpose of the cash flow? What are the three activities that we will see on the cash flow statement? 12. How are the financial statements interconnected? Which is completed first and why? 13. List the characteristics of the financial statements and define each of them? Why are the Characteristics so important? How do they aid the external users? Chapter 3: 1. What is the difference between an event and a transaction? Which one is recorded on the financial statements and which is not? 2. What is an external vs an internal event? When is an event a transaction? 3. What is the role of source documents in a company?
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Chapter 4 1. When should economic events be recognized in the financial statements? 2. What is the definition of the word recognition in regards to accounting? 3. What is the definition of historical cost? Are financial statements based on historical cost or market value? Be sure to explain why. 4. What unit of measure is used in the financial statements? 5. Describe the cash basis of accounting. What is the drawback of the cash basis accounting? 6. Describe the accrual basis of accounting. Why do financial statements use the accrual basis of accounting? 7. What do the income statement and the statement of cash flows reveal about a business? Compare the income statement and the statement of cash flow – in what way are they similar? In what way are they different? 8. What is the connection between the time period assumption and accrual accounting? 9. How is the accrual basis of accounting connected to adjusting entries? 10. Define adjusting entries. Why are they required? 11. What are the four types of adjusting entries and what are their characteristics/attributes? 12. How would a deposit received from a customer be recorded in the financial statements? What type of adjusting entry would be needed at the end of the year for this deposit? 13. What is straight-line depreciation? How is it calculated? Provide a definition of the account: accumulated depreciation. What financial statement does it show up on? 14. A company takes out a loan at the beginning of the year. Interest and principal are due at maturity. The loan is for 18 months. What type of adjusting entry would be needed at the end of the fiscal year? What would be the impact on the accounting equation of this type of adjusting entry? 15. What is a prepaid expense and what financial statement is it recorded on? 16. For a prepaid adjusting entry, what 2 categories are always affected and how (+ or -)? 17. What is unearned revenue and is it included under Revenues on the income statement? Why or why not?
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Chapter 5 1. What is FOB destination? Who owns inventory while it is in transit if it has been shipped FOB destination? Who pays for the freight? How is the freight recorded in the financial statements when it is paid by the appropriate party? Does it affect the balance sheet only or the balance sheet and income statement? 2. What is FOB shipping point? Who owns the inventory while it is in transit if it has been shipped FOB shipping point? Who pays for the freight? How is the freight recorded in the financial statements when it is paid by the appropriate party? Does it affect the balance sheet only or the balance sheet and income statement? 3. What is the revenue recognition principle and why is it important? What criteria guides accountants as to when revenue should be recognized? 4. Define the matching principle. Why is the matching principle important when considering the recognition of expenses? 5. What is the difference between the single step income statement and the multiple step income statement? What type of company is the multiple step income statement used for? 6. You are selling inventory to a customer. Why would you offer a sales discount? What are the benefits and drawbacks of offering this discount? 7. Define the account sales returns and allowances. Is this account an expense account on the income statement? Why or why not? 8. Define the account sales discounts. Is this account an expense account on the income statement? Why or why not? 9. What is gross profit and how is it calculated? 10. What is the difference between the periodic and perpetual inventory system? Give an example of a company that would use the periodic inventory system and explain why. 11. What type of inventory system, periodic or perpetual, requires an inventory count? What is the purpose of the inventory count under each type of inventory system?
8
COURSE SCHEDULE: For each chapter you will see that different levels of comprehension are required for different learning objectives. Note that the learning objectives listed on the course outline are the same learning objectives that are listed at the beginning of every chapter. For example, on page 4 of the textbook you will see that Chapter 1 lists 6 learning objectives. For each chapter, the Course Schedule indicates if you should "Scan", "Understand", or "Master" the related material. These labels indicate the level of comprehension required for each learning objective. A definition of these terms are as follows:
Scan:
Base knowledge of the vocabulary and comprehend the basic concepts.
Understand:
Scan AND application of your knowledge regarding calculations, how the material can be used and how it affects financial decisions.
Master:
Scan AND Understand AND be able to analyze, evaluate, and prepare it for use in financial statements and decision making.
All material is critical to your understanding of accounting and is subject to testing but you should devote more intensive study to the material denoted with an "Understand" and "Master" level.
9
