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Major Field Test Business Study Set Guide

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EMILLECT 2024/2025 ACADEMIC YEAR ©2024 EMILLECT. ALL RIGHTS RESERVED. FIRST PUBLISH OCTOBER 2024. Page 3/32 An "accelerated" depreciation method (more expense is recorded in the early periods of useful life and less in the later periods.) Basic Inventory Equation for Goods - Answer-Beginning I...

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EMILLECT 2024/2025 ACADEMIC YEAR ©2024 EMILLECT. ALL RIGHTS RESERVED. FIRST PUBLISH OCTOBER 2024.

Major Field Test Business Study Set
Guide

Balance Sheet - Answer✔✔-Attempts to describe the financial condition of the firm at a point

in time.

Includes: Assets, Liabilities, & Equity - "net assets" what remains after deducting liabilities from

assets..

Income Statement - Answer✔✔-Presents the results of the operations of an entity over a peroid

of time.

Includes: Revenues, Expenses, Income, Gains & Losses

Statement of Equity or Statement of Retained Earnings (Capital) - Answer✔✔-Bridges the gap

between the income statement and the balance sheet.

Arrangement depends on type of organization:

Proprietorship: Statement of Owners Equity

Partnership: Statement of Partners Equity

Corporation: Statement of Stockholders Equity

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,EMILLECT 2024/2025 ACADEMIC YEAR ©2024 EMILLECT. ALL RIGHTS RESERVED. FIRST PUBLISH OCTOBER 2024.

In addition, it contains: Investments by Owners and Distribution to owners

Statement of Cash Flows - Answer✔✔-Provides information about a company's cash receipts

and cash payments during a specific period of time.

Includes all 10 elements of financial statements: assets, liabilities, equity, net income, income,

gains, losses, Statement of 'X' Equity, Investments by Owners, Distributions to Owners.

Cash Basis Accounting - Answer✔✔-Revenue is recognized in the accounting period in which the

associated cash is received and Expenses are recognized in the accounting period that the cash

is paid.

Accrual Basis Accounting - Answer✔✔-Revenue is recognized in the accounting period in which

the revenue is earned, regardless of when the associated revenue is received. (Recorded when

the sale is made, not when it is paid for.)

Depreciation - Answer✔✔-A method of allocating the cost of a tangible asset over its useful life.

Businesses depreciate long-term assets for both tax and accounting purposes.

Straight-Line Deprecation - Answer✔✔-Straight Line Depreciation - (estimated value/useful life)

Equal amounts of depreciation expense are recorded in each period of the useful life of the

asset, if not disposed of prior to the end of estimated useful life.

The value is divided among estimated life of item.

Double Declining Balance Depreciation - Answer✔✔-Double Declining Balance

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,EMILLECT 2024/2025 ACADEMIC YEAR ©2024 EMILLECT. ALL RIGHTS RESERVED. FIRST PUBLISH OCTOBER 2024.

An "accelerated" depreciation method (more expense is recorded in the early periods of useful

life and less in the later periods.)

Basic Inventory Equation for Goods - Answer✔✔-Beginning Inventory + Purchases = Goods

Basic Inventory Equation for Cost of Goods Sold (COGS) - Answer✔✔-Goods Available for Sale -

Ending Inventory = Cost of Goods Sold (COGS)

Basic Inventory Equation for Ending Inventory - Answer✔✔-Beginning Inventory + Purchases =

Goods Available for Sale - Cost of Goods Sold (COGS) = ending inventory

Periodic Inventory Accounting - Answer✔✔-No transactions are recorded in the inventory

account until the end of the accounting period. Merchandise purchases are recorded in a

purchases account.

Inventory is counted and costed at the end of each accounting period. The inventory account

beginning balance is adjusted to physical inventory amount and the difference is added to or

subtracted from periodic Cost of Goods Sold.

Perpetual Inventory Accounting - Answer✔✔-Merchandise purchases are added to the

inventory account when the merchandise is received.

Cost of Goods Sold is computed and subtracted from the inventory account as sales are

recorded.

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, EMILLECT 2024/2025 ACADEMIC YEAR ©2024 EMILLECT. ALL RIGHTS RESERVED. FIRST PUBLISH OCTOBER 2024.

FIFO (Inventory) - Answer✔✔-Inventory Oldest items inventory are sold first .(Example: Fruit)

LIFO (Inventory) - Answer✔✔-Most recent items added to inventory are sold first. (Example: Ore

from Mining)

Average Cost (Inventory) - Answer✔✔-Ending inventory units are costed using an average cost

of goods available divided by the units available for sale. (Example: Rope)

Specific Identification (Inventory) - Answer✔✔-Inventory items are tagged with their cost.

(Example: automobiles)

Generally Accepted Accounting Principles (GAAP) - Answer✔✔-A framework of accounting

standards, rules and procedures defined by the professional accounting industry, which has

been adopted by nearly all publicly traded U.S. companies.

Securities Act of 1935 - Answer✔✔-Established the SEC Securities and Exchange Commission

with the explicit authority to establish the rules, standards, and procedures used to account for

transactions and events. Also to establish the form and content of published financial reporting.

Management Accounting - Answer✔✔-Concerned with identification, measurement,

accumulation, analysis, preparation, interpretation, and communication of financial information

used my management to plan and evaluate and control within an organization to assure

appropriate use of and accountability of resources.

Cost Accounting - Answer✔✔-Concerned only with the cost of a product or service.

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