Exam Review
Chapter 1: Accounting and Business
 accounting
 types of business (service, merchandising, manufacturing, non-profit)
 forms of business ownership (sole proprietorship, partnership, corporation)
 CA, CMA, CGA
 auditing
 Canadian Institute of Chartered Accountants
 CICA Handbook
Chapter 2: The Balance Sheet
 asset
 liability
 owner’s equity (capital, net worth)
 balance sheet
 accounts receivable
 debtor
 accounts payable
 creditor
 liquidity
 accounting principles (GAAP)
o business entity concept
o continuing concern concept
o principle of conservatism
Chapter 3: Analyzing Changes in Financial Position
 business transaction
 source document
 accounting principle GAAP - objectivity principle
Chapter 4: The Simple Ledger
 account
 ledger
 t-accounts
 debit/credit
 accounting entry
 double entry system of accounting
 account balance
 exceptional account balance
 trial balance
Chapters 5 and 6: Expanded Ledger/The Journal and Source Documents
 equity accounts - capital, drawings, revenue, expense
 income statement
 fiscal period
 chart of accounts
 trial balance
 Source Documents:
o cash sales slip
o sales invoice
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o purchase invoice
o cheque copy
o cash receipts daily summary
o bank debit advice
o bank credit advice
o others…bank statement, credit card statement, memorandum…
serially prenumbered documents
accounting principle - cost principle
Sales Tax:
o goods and services tax (GST)
o harmonized sales tax (HST)
o remitting GST to the government
o input tax credit
o contra account
buying and selling on credit/on account
generally accepted principles
o time period concept
o revenue recognition principle
o matching principle
journal (book of original entry)
two-column general journal
journal entry
journalizing
Chapter 7
 posting
 cross-referencing
 accounting cycle
 trial balance out of balance
o shortcuts in detecting a single error
 transposition error
Chapter 8
 work sheet
 accounts receivable control account
 accounts payable control account
 income statement
 balance sheet formats
o account form balance sheet
o report form balance sheet
 classified balance sheet - current assets, fixed assets (or plant and equipment), current
liabilities, long-term liabilities, owner’s equity
 accountability
o users of financial statements
o audit
 accounting principles
o full disclosure principle
o consistency principle
o materiality principle
 comparing financial data
o trend analysis
o common size statements
Chapter 9: Completing the Accounting Cycle
 Adjusting Entries
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Types of adjustments
o late purchase invoices
o supplies
o prepaid expense
o depreciation
 straight line method
 declining balance method
accumulated depreciation
net book value
contra account
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Closing entries
o real accounts/permanent accounts
o nominal accounts/temporary accounts
o closing an account
o income summary account
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Accounting cycle
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GAAP
o matching principle
o materiality principle
o consistency principle
o full disclosure principle
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Audit
Chapter 10: Cash Control and Banking
 internal control
 bank reconciliation statement
Chapter 11: Accounting for a Merchandising Business
 merchandise inventory
 inventory methods
o periodic inventory method
o perpetual inventory method
 physical inventory
 purchases account
 freight-in account
 calculating cost of goods sold
 gross profit
 closing entries
 credit invoice
 sales returns and allowances
 purchases returns and allowances
 discounts for early payment – discounts allowed and discounts earned, terms of sale
 inventory shrinkage
Chapter 12: Modifying Accounting Systems
 subsidiary ledger
Chapter 13: Business Organization and Decision-Making
 partnerships
 advantages and disadvantages of partnerships
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partnership agreement
corporation
share certificate / stock certificate
shareholder
common shareholders
limited liability
board of directors
advantages and disadvantages of corporations
public corporations
private corporations
capital stock
retained earnings
dividends
apportionment of net income or net loss for a partnership
o salaries
o interest
o income or loss sharing ratio
common stock
preferred stock
statement of distribution of net income
statement of partners’ capital
ratio and percentage analysis
o current ratio
o quick ratio
o accounts receivable collection period
o inventory turnover
o debt ratio
o equity ratio
o rate of return on sales
o rate of return on shareholders’ equity
o times interests earned ratio
o earnings per share
o price earnings ratio