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ACCT 212 Midterm Exam
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ACCT 212 Midterm ExamQuestion 1: (TCO 1) The Accounting Equation is used to develop the
organization's financial reports. (1) Describe what owners' equity
values would be if Assets are $100,000 and Liabilities are
$27,000 by showing the Accounting Equation (10 points) and (2)
provide an explanation of what accounts could be found in
owners' equity. (10 points)
Student Answer: Assets, liabilities, owners equity Owners equity = assets –
liabilities Owners equity = 100,000 – 27,000 Owners equity =
73,000
Paid in capital: is capital outstanding for the period which are
measured by book value also called preferred shares. -Retained
earnings: is the earnings available to the shareholders. It's the
accumulated profits from past years that becomes available after
all dividend and obligations are taken care of. -Treasury stock:
the shares that are bought back by the company form
shareholders or the open market
Instructor Textbook pages 11-12. Owners' Equity = $100,000 - $27,000 =
Explanation: $73,000. Stock, Additional Paid in Capital, and Retained Earnings
are examples.
Comments: ok.
Question 2 Question : (TCO 1) The financial statements present a company to the public
. in financial terms. (1) Which financial statement identifies where
cash was generated and where it was spent during the year (10
points), and (2) identify the three major parts of this statement.
(10 points)
Student Answer:
Statement of cash flows: is a financial statement that provides an
overview of the cash inflows and outflows of the business during
a certain period of time.
Operation, Investing and financing
, Instructor Textbook pages 15-21. Statement of Cash Flows. Operating,
Explanation: Investing, and Financing.
Comments: ok.
Question 3 Question : (TCO 1) The accounting profession follows a set of guidelines for
. measurement and disclosure of financial information called the
Generally Accepted Accounting Principles (GAAP). (1) Explain
what the International Financial Reporting Standards (IFRS) are
(10 points) and (2) provide an example of its application. (10
points)
Student Answer: Accounting guidelines, formulated by the International
Accounting Standards Board (IASB). By 2015, U.S. GAAP is
expected to be harmonized with IFRS. At that time, U.S.
companies are expected to adopt these principles for their
financial statements, so that they can be compared with those of
companies from other countries. It's a way to set a certain report
that will make the global economy report using the same
standard. It was intended to be used by third world businesses to
make it easier raising capital.
Provision of loan losses -Impairment of investments -
Consolidation of entities -Transfer pricing
Instructor Textbook pages 6-9. Standards that will make the global economy
Explanation: report using the same standards. The intention is to make raising
capital easier for third-world businesses.
Comments: ok.
Question 4 Question : (TCO 2) Transaction analysis results in the development of a
. journal entry. Supplies are purchased on account agreeing to pay
$500 within 30 days. (1) Name the accounts impacted and how to
use the format account name/debit or credit/dollar amount (10
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