Financial Accounting Education Strategies Study Guide

Preferred and Common Stock Overview

This module covers preferred stock with special privileges and common stock representing basic ownership of a corporation.

• Preferred stock
• Common stock
• Cash dividends
• Dividends in arrears
• Convertible preferred stock
• Voting rights
• Liquidation rights
• Preemptive right
• Class A and Class B Common Stock
• Retained earnings

Liquidity Solvency and Activity Analysis

This module covers retained earnings and the analysis of liquidity, solvency, and activity ratios to measure a company's ability to meet financial obligations.

• Retained earnings
• Liquidity analysis
• Solvency analysis
• Activity analysis
• Liquidity ratio
• Solvency ratio
• Activity ratios
• Short-term debts
• Long-term financial obligations

Miscellaneous Accounting Components

This module covers miscellaneous accounting components including investments and contingent liabilities.

• Investments
• Long-term investments
• Held-to-Maturity investments
• Short-term investments
• Certificates of deposit
• Stock
• Trading Investments
• Available-for-Sale Investments
• Contingent Liabilities
• High Probability

Assessing Warranty Claim Probabilities

Analyzing medium and low probability scenarios regarding clients who sold faulty products and settled related warranty claims.

• Medium Probability
• Low Probability
• Warranty claims
• Faulty product
• Product recall

Financial Statements and Forms of Business

Financial statements possess common components and relationships, while businesses are categorized based on ownership types including sole proprietor, partnership, and corporation.

• Financial statements components
• Activity Based Costing
• Inventory
• Income and Expenses
• Costs of goods sold
• Net Income
• Sole Proprietor
• Partnership
• Corporation
• Business ownership

Accounting Concepts for Income Statements

This module covers deferred revenues, annuities, taxes, and cost of goods sold for businesses and manufacturers.

• Deferred Revenues
• Annuities
• Taxes
• Cost of Goods Sold
• Income Statement
• Materials
• Labor
• Overhead
• Gross Profit Formula

Income Statement and Profitability Analysis

This module covers the income statement formula, irregular items such as discontinued operations and extraordinary items, and profitability analysis.

• Income Statement Formula
• Discontinued Operations
• Extraordinary Items
• Profitability Analysis
• Sales Potential

Financial Statement Analysis Techniques

The module covers horizontal analysis, ratio analysis, vertical analysis, and profitability analysis.

• Horizontal Analysis
• Ratio Analysis
• Vertical Analysis
• Profitability Analysis

Profitability Analysis and Sales Potential

Businesses forecast the lucrativeness of existing projects and sales potential through horizontal, vertical, and ratio analysis.

• Sales potential
• Horizontal analysis
• Ratio analysis
• Vertical analysis
• Gross margin
• Profitability analysis

Understanding Owner's Equity and Statements

Owner's equity represents the owner's claim on business assets and is detailed in a statement of owner's equity.

• Owner's equity
• Owner's claim on assets
• Statement of owner's equity
• Net income
• Income statement

Purpose and Presentation of Financial Statements

Financial statements exhibit changes in financial position of a business and are useful for making economic decisions.

• Purpose of Financial Statements
• Presentation of Financial Statements
• Relationships Between Financial Statements
• Income statement
• Statement of owner’s equity
• Balance Sheet
• Assets
• Liabilities
• Share holders equity

The Income Statement and Financial Presentation

This module covers the presentation format issues, recognition of revenue and expenses, cost of goods sold, and profitability analysis of the income statement.

• Income Statement
• Presentation Format Issues
• Recognition of Revenue and Expenses
• Cost of Goods Sold
• Irregular Items
• Discontinued Operations
• Extraordinary Items
• Profitability Analysis
• Financial Accounting

Income-Expense Statement and Financial Reporting

A financial report that shows the results of business operations over a period of time to measure outcomes and gauge growth.

• Income-Expense Statement
• Business operations
• Fiscal Period
• Growth Information
• Balance Sheet
• Account balances

Bookkeeping, Payroll, and Financial Statements

This module covers bookkeeping, payroll, net income, and the use of a chart of accounts including T-accounts and ledgers.

• Bookkeeping
• Payroll
• Net Income
• Income Statement
• Profit Sales
• Liquidity
• Investments
• Owner’s Equity
• Net Profit
• Chart of Accounts
• T-Account
• Accounts Payable Ledger
• General ledger
• Debtor’s ledger
• Wage Expense ledger
• Payroll ledger

Recognition of Revenue and Expenses

The income statement summarizes revenue and expense accounts to determine net income and explain changes in owner's equity.

• Recognition of Revenue and Expenses
• Income Statement
• Net Income
• Owner's Equity
• Revenue accounts
• Expense accounts
• Deferred Revenues
• Balance Sheet

The Balance Sheet and Asset Valuation

This module covers the balance sheet including cash, internal controls, valuation of accounts and notes receivable, and valuation of inventories.

• Cash and Internal Controls
• Valuation of Accounts Receivable
• Valuation of Notes Receivable
• Bad Debts
• Allowance for Doubtful Accounts
• Contra-asset account
• Valuation of Inventories
• Periodic inventory method

Acquisition, Disposal, and Depreciation of Assets

This module covers the acquisition and disposal of long-term assets, including perpetual inventory methods, book value, and the allocation of expenses through depreciation, amortization, and depletion.

• Perpetual inventory method
• Days in Inventory
• Inventory turnover
• Acquisition of Long-Term Assets
• Disposal of Long-Term Assets
• Book value
• Asset Depreciation
• Amortization
• Depletion
• Intangible assets
• Natural resources
• EBITDA

Accounting for Intangible Assets

Intangible assets have no physical form and offer value to the business through patents, goodwill, trademarks, and franchises.

• Intangible assets
• Patents
• Goodwill
• Trademarks
• Trade names
• Franchises
• Licenses
• Useful life
• Legal life
• Amortization
• Impairment
• Copyright

Accounts, Notes, and Long-Term Liabilities

This content covers accounts payable, notes payable, and long-term liabilities such as bonds payable.

• Accounts payable
• Notes payable
• Principal
• Present Value of a Note
• Long-Term Liabilities
• Bonds Payable
• Corporate Bond
• Government Bond
• Municipal Bond
• Treasury Bonds
• Bond Valuation
• Discount on bonds payable
• Contra-liability account
• Bond book value

Inventory Valuation and Tracking Methods

Inventory valuation includes costs of production, materials, labor, and overhead using periodic or perpetual inventory methods.

• Inventory valuation
• Periodic inventory method
• Perpetual inventory method
• Days in Inventory
• Inventory turnover
• Cost of goods sold

Understanding Contingent Liabilities

A contingent liability is a potential, unknown cost that may or may not be incurred.

• Contingent Liabilities
• High Probability
• Medium Probability
• Low Probability
• Warranty of products
• Guarantee of another party's loan
• Lawsuits filed against a company

Introduction to Generally Accepted Accounting Principles

An overview of Generally Accepted Accounting Principles (GAAP) including rules for transaction analysis, the accounting cycle, and financial statement principles.

• Generally Accepted Accounting Principles (GAAP)
• Double-Entry Accounting
• Transaction Analysis
• Accounting Equation
• The Accounting Cycle
• Business Ethics
• Financial Statements
• Forms of Business
• Balance Sheet
• Assets
• Current Assets
• Conservative Principle
• Going-Concern Principle
• Historical Cost Principle
• Objectivity Principle
• Stable Monetary Unit Principle

Fundamentals of GAAP and Financial Management

This material covers Generally Accepted Accounting Principles (GAAP) standards, financial statement regulation, and the roles of standard-setting bodies in financial reporting.

• Generally Accepted Accounting Principles (GAAP)
• Financial Statement Regulation
• Balance Sheet
• Income Statement
• Statement of Cash Flows
• Statement of Owners’ or Stockholders’ Equity
• Note Disclosures
• Capital Allocation
• Securities and Exchange Commission (SEC)
• American Institute of Certified Public Accountants (AICPA)
• Government Accounting Standards Board (GASB)
• Sarbanes-Oxley Act (SOX)
• Conservative Principle
• Going-Concern Principle

Rules of Double-Entry Accounting and Transactions

This module covers the Objectivity Principle, rules for double-entry accounting, transaction analysis, and the components of the accounting equation.

• Objectivity Principle
• Double-Entry Accounting
• Debits and Credits
• Transaction Analysis
• Accounting Equation
• Assets
• Liabilities
• Owner’s Equity

The Accounting Cycle and Business Ethics

The accounting cycle is the process of recording and processing the accounting events of a business, while ethics initiate internal controls.

• Accounting Cycle
• Transactions
• Adjustments
• Financial Statements
• Balance Sheet
• Income Statement
• Cash Flow
• Equity
• Business Ethics
• Internal Controls
• Sarbanes-Oxley Act (SOX)
• Code of Ethics
• Full Disclosure

Statement of Cash Flows Indirect Method

The indirect method computes cash flow from business operations by using changes in asset and liability accounts to adjust net income.

• Indirect Method
• Cash Flow Analysis
• Operating Activities
• Financing Activities
• Investing Activities
• Net Income
• Asset Accounts
• Liability Accounts

Cash Flow Analysis and Relationships

Cash flow analysis exhibits a starting balance and total net cash flow to determine the cash end of period value.

• Cash flow analysis
• Total net cash flow
• Beginning cash account balance
• Cash end of period
• Cash flow statement

Understanding the Cash Flow Statement

The Cash Flow Statement shows where the cash came from and where it went during the period.

• Cash flow from Operations
• Cash flow from investing activities
• Cash flow from financing activities
• Net cash flow
• Cash—end of period
• Cash—Beginning Of Period
• Total change in cash

Operating, Financing, and Investing Activities

This module covers operating, investing, and financing activities found in the cash flow statement.

• Operating Activities
• Investing Activities
• Financing Activities
• Cash Flow Statement
• Income-producing sources
• Lenders
• Investors

Cash Flow Statement Analysis and Components

The Cash Flow Statement shows where cash came from and where it went by displaying cash flow from operations, investing activities, and financing activities.

• Cash flow from operations
• Cash flow from investing activities
• Cash flow from financing activities
• Net cash flow
• Cash—end of period
• Cash—beginning of period
• Total change in cash

The Principle of Conservatism in Accounting

The principle of conservatism influences financial accounting by requiring that when two or more equally likely possibilities exist, the option that makes the company look worse is selected to safeguard the public.

• principle of conservatism
• asset vs expense distinction
• U.S. GAAP
• financial reporting
• net income
• financial statements

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Performing Audits and Internal Control

Independent auditors perform testing procedures to provide reasonable assurance that financial statements are presented fairly and contain no material misstatements according to U.S. GAAP.

• independent audit
• reasonable assurance
• material misstatement
• U.S. GAAP
• audit testing procedures
• internal control
• unqualified opinion
• independent auditor's report
• PCAOB standards
• accounting principles

Inventory Accounting and Valuation Methods

This content covers inventory systems, valuation rules, and accounting procedures for managing inventory costs and discrepancies.

• perpetual inventory system
• periodic inventory system
• lower-of-cost-or-market rule
• physical inventory count
• cost of goods sold
• FOB shipping point
• net realizable value
• conservatism principle
• inventory discrepancies
• journal entries for inventory

Webworks Comprehensive Financial Accounting Problem

A comprehensive problem involving journal entries, T-accounts, unadjusted trial balance, adjusting entries, and financial statements for Webworks.

• journal entries
• T-accounts
• unadjusted trial balance
• adjusting entries
• financial statements
• periodic system
• accounts receivable
• accounts payable
• supplies
• inventory
• cost of goods sold
• bad debts
• accrued expenses
• prepaid rent

Inventory Costing Methods and Analysis

Exercises involving the determination of cost of goods sold, ending inventory, and gross profit using various inventory costing methods.

• periodic FIFO method
• perpetual FIFO method
• periodic LIFO method
• perpetual LIFO method
• averaging method
• weighted average method
• moving average method
• inventory turnover
• cost of goods sold
• ending inventory
• gross profit
• gross profit percentage
• number of days inventory is held

Accounting for Research and Development

U.S. GAAP requires that research and development costs be expensed as incurred due to inherent uncertainty, whereas IFRS requires the capitalization of development costs.

• research
• development
• U.S. GAAP
• IFRS
• expensing costs as incurred
• capitalization of development costs
• uncertainty in reporting
• matching principle
• asset understatement
• conservatism

Accounting for Equity Investments

The reporting of equity investments depends on the purpose of the acquisition, specifically regarding trading securities and available-for-sale securities.

• trading securities
• available-for-sale securities
• fair value
• historical cost
• unrealized gain
• unrealized loss
• realized gain
• realized loss
• dividend revenue
• net income
• comprehensive income
• stockholders’ equity
• other accumulated comprehensive income

Accounting for Notes and Bonds

This topic explains debt financing through notes and bonds, including the calculation of present value, effective interest rate methods, and accounting for zero-coupon, term, and serial bonds.

• debt financing
• financial leverage
• noncurrent liabilities
• notes
• bonds
• face value
• stated cash interest rate
• effective interest rate
• zero-coupon bonds
• term bonds
• serial bonds
• present value
• ordinary annuity
• compounding
• interest expense
• discount
• premium

Accounting for Operating and Capital Leases

This topic explores how a lessee accounts for lease contracts as either an operating lease or a capital lease based on the substance of the transaction and specific FASB criteria.

• operating lease
• capital lease
• lessee
• lessor
• off-balance sheet financing
• substance over form
• present value of future cash flows
• incremental borrowing rate
• annuity due
• depreciation
• interest expense
• prepaid rent
• IFRS vs U.S. GAAP lease classification

Recognition of Deferred Income Taxes

This section explains how deferred income tax liabilities are created due to differences between U.S. GAAP and the Internal Revenue Code.

• U.S. GAAP
• Internal Revenue Code
• Deferred income tax liability
• Temporary tax difference
• Matching principle
• Installment sales method
• Taxable income
• Revenue recognition
• Expense recognition

Stockholders' Equity and Financial Ratios

Exercises involving common stock, preferred stock, treasury stock, dividends, and various financial ratios.

• common stock
• preferred stock
• treasury stock
• stock dividends
• cash dividends
• retained earnings
• par value
• capital in excess of par
• basic earnings per share
• diluted earnings per share
• return on equity
• price-earnings ratio

Financial Accounting End-of-Chapter Exercises

End-of-chapter exercises involving journal entries, T-accounts, trial balances, and financial statements for Webworks.

• journal entries
• T-accounts
• unadjusted trial balance
• adjusting entries
• bad debts
• straight-line depreciation
• amortization
• cost of goods sold
• adjusted trial balance
• financial statements
• statement of cash flows
• indirect method
• periodic FIFO
• present value of annuity

Financial Accounting Textbook Preface and Authors

This document provides information about the authors and the educational structure of a financial accounting textbook designed to enhance student learning.

• financial accounting
• Socratic method
• U.S. GAAP
• IFRS
• financial reporting
• business decisions

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