ACCT 201: Review Sheet for Exam 2

You are encouraged to carefully review the lecture notes and accompanying text
material, as well as to redo all examples, and homework problems. This practice
will be much more meaningful if you work the problem without first looking at the
solution.
Complete the ORION tasks for Chapters 4-6 before the exam for 10 points credit
on Exam 2. You only need to complete the minimum 40 required questions for
credit. Please do not pay attention to the WileyPlus gradebook scores for
this assignment (AT ALL!), because your points are only included as part of
the Exam 2 grade. Most likely, WileyPlus will show 0 or 1 points as your
score, but you will receive full credit if you complete the 40 questions.

You may bring a basic four-function calculator to the exam. You may not share
calculators or use PDAs or cell phones for this capacity. Please do not bring a
graphing calculator to the exam.

You will have 1 hour and 20 minutes for the exam. Please allocate your time
wisely. If you understand the material well you should not have difficulty
completing the exam in the allotted time.

Good luck in your preparation!

General Format of the Exam

Estimated
time

Points
possible

Part 1: Multiple Choice

(26 questions, 2.5 points each)

55 minutes

65 points

Part 2: Journal Entries

15 minutes

15 points

Part 3: Multiple-Step Income Statement

10 minutes

10 points

ORION Chapters 4-6

Total Exam 1

(At home)
80 minutes

10 points
100 points

Chapter 4 Material

Accrual vs. Cash-Based Accounting

Accrual Accounting
o When to recognize revenues and the governing principles
o When to recognize expenses and the governing principles
Adjusting Entries
o Transactions/accounting events requiring adjusting entries
o Effects of adjusting entries on the financial statements
o Concepts and preparation of adjusting entries for deferrals, accruals, and
depreciation expense
o Accounts involved in adjusting entries
Depreciation Basic Concepts and Calculation
o Depreciation expense
o Accumulated depreciation
Closing Entries
o Temporary/nominal accounts vs. permanent accounts
o Why closing occurs
o Process of preparing closing entries

Chapter 5 Material
Periodic versus perpetual systems
Purchase and sale of inventory under periodic and perpetual systems
o All Journal entries associated with inventory
o Costs included in inventory
Shipping costs
o FOB terms
o Freight in vs. Freight out and where each is recorded
Multiple step income statement
o Be able to write from scratch given a list of accounts
o Profit margin ratio and gross profit rate calculations
Special accounts for periodic inventory systems
o Know definition of each account, type of account, and related journal
entries
Calculate COGS for a periodic inventory system
o Basic equations discussed in class to calculate COGAS and COGS
Chapter 6 Material
Determine which inventory items should be included/excluded from inventory
counts
o FOB Shipping points and ownership
Inventory costing methods (Specific unit, weighted average, LIFO, FIFO)
o Advantages/disadvantages of each method
o Calculate COGS and Ending inventory for each method
FIFO vs. LIFO
2

o Comparison of the inventory methods (why managers would choose a

particular method)
o Effects of inflation on cost of goods sold, ending inventory, gross profit/net
income, taxes
Lower of cost or market
Calculate Financial Ratios for Inventory
o Inventory turnover
o Days in Inventory