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ECON S-1900 Financial Accounting

STUDY GUIDE – MIDTERM EXAM

▪ Exams will be administered via Canvas and will require the use of Proctorio while you are taking the exam.

▪ Proctorio works only on Google Chrome or Microsoft Edge, and will require you to download the Proctorio extension before you take the exam. Please download and install this extension as soon as you are able. (Instructions are available on the Student Guide, located in Canvas, under Proctorio Content.)

▪ You will need your camera and microphone during the exam. Proctorio can also be particular when it comes to lighting. Please ensure that the room in which you will be taking your exam is well-lit.

▪ Additionally, be aware that Proctorio will clear your browser’s internet history while in the exam. It will also delete any documents that are open before entering the exam or those opened during the exam.

▪ Please take the Proctorio Setup Quiz (in Canvas, under Exam Material) to ensure that your system is set up appropriately for the actual exam, as well as to understand and experience what the testing environment will be like (as the settings for the Setup Quiz will mimic those that will govern the actual exam).

▪ At the beginning of the exam, you will be required to scan a picture ID for security purposes. Note that only I will be able to see this if I so choose (and I do not plan to do so), but if you want to cover any sensitive information in your ID, all I really need to see is your name and picture on the ID.

▪ The exam will open on Sunday, July 9, at 12:00 am, and will close on Monday, July 10, at 11:59 pm (Eastern).

▪ It is an open-notes, open book exam. You will be given exactly 3 hours (or 180 contiguous minutes) to complete the exam, once you begin. (This time excludes any Proctorio set-up time.) The exam will automatically stop after the exam period is over.

▪ The exam consists of 20 multiple choice items worth 2 points each (40 points) and open-ended questions and problems worth 60 points, for a total of 100 points. The practice midterm exam that is posted on Canvas will have a similar format as the actual exam.

▪ Do not discuss this exam after you have completed it, as others are taking the exam at different times during the exam window.

Coverage: Chapters 1-5

General Concepts – Overview of Financial Accounting. Know the following:

▪ Accounting: Definition and areas of specialization

▪ Conceptual framework: Objective of financial accounting, and qualitative characteristics of financial statements

▪ Main financial statements: Balance sheet, income statement (P&L), Statement of changes in equity (Statement of changes in retained earnings)

Understand how the following are applied to financial statements/reporting:

1. General Assumptions in Preparing Financial Statements

▪ Going concern/Continuity

▪ Time Period assumption

▪ Separate economic entity (Accounting entity)

▪ Monetary unit

2. Principles of Accrual Accounting

▪ Historical cost

▪ Revenue recognition

▪ Matching (or expense recognition)

▪ Materiality

Understand, and know how to do, each step of the Accounting Cycle:

1. Journalize transactions.

2. Post to Ledger.

3. Prepare a trial balance.

4. Journalize and post adjustments.

5. Prepare F/S.

6. Close accounts.

Know the parts of an annual report, as well as generally what common terms (such as non-controlling interests and goodwill) mean.

Ratios:

▪ Current ratio

▪ Profit margin

▪ Asset turnover