ACG3101

Financial Accounting and Reporting 1

Key Topics – Ch 7
• Cash and cash equivalents
• Recognition of AR
• Trade discounts
• Sales discounts (gross method vs. net method)
• Sales returns and allowances
• Valuation of AR
• Direct write-off method
• Allowance method
• Entries
• Determining bad debt expense (% of sales, % of receivables, aging of AR)
Key Topics – Ch 7
• Notes receivable
• Zero-interest bearing
• Interest-bearing
• Notes received in exchange for property, goods, or services
• Fair value option
• Disposition of AR
• Factoring (with and without recourse)
• Secured borrowing
• Analysis of AR
• AR Turnover
Key Topics – Ch 18
• 5-Step Process
• Identify performance obligations
• Determine transaction price
• Variable consideration (expected value versus most likely amount)
• Time value of money
• Noncash consideration
• Volume discounts
• Allocate transaction price to performance obligation
• If all standalone selling prices known, then based on percentage of total standalone
selling prices
• If all standalone selling prices not known, then allocate to known items first, then
residual is allocated to unknown item
Key Topics – Ch 18
• Know when performance obligation is satisfied (and revenue
recognized)
• Change in control
• Sales returns and allowances
• Cash versus credit sales
• Repurchase agreements (conceptually)
• Bill-and-hold arrangements (conceptually)
• Consignments (entries and calculations)
• Warranties (entries and calculations)
Key Topics – Ch 18
• Contract modification
• New contract versus pure modification
• Percentage-of-completion method
• Contract with profit in every year
• Loss in interim period, but overall profitable contract
• Loss on unprofitable contract
• Completed contract method
• Overall profitable contract
• Loss on unprofitable contract
Key Topics – Ch 8
• Accounts used by merchandising company versus manufacturer
• Periodic inventory method
• Perpetual inventory method
• Goods included in inventory
• Goods in transit (FOB shipping point versus FOB destination)
• Consigned goods
• Sales with repurchase agreement
• Purchase discounts (gross versus net method)
Key Topics – Ch 8
• Cost flow assumptions
• Specific ID
• Average cost
• Weighted-average method (periodic)
• Moving-average method (perpetual)
• FIFO (periodic versus perpetual)
• LIFO (periodic versus perpetual)
• LIFO Reserve & LIFO Layers
• Dollar Value LIFO
• Inventory errors
Key Topics – Ch 9
• Calculation of NRV
• Lower-of-cost-or-NRV (LCNRV)
• Calculations & entries
• Loss method versus COGS method
• Allowance versus no Allowance
• Lower-of-cost-or-market (LCM)
• Calculations & entries
• Loss method versus COGS method
• Allowance versus no Allowance
Key Topics – Ch 9
• Alternative valuation approaches
• NRV
• Relative Sales Value (for lump-sum purchases)
• Gross Profit method
• Gross profit on selling price versus markup on cost
• Retail Inventory Method
• Conventional (LCM)
• Cost
• LIFO Retail
• Treatment of special items
• Analysis – Inventory Turnover, Average Days to Sell Inventory
Test Taking Tips
• Be mindful of time!
• Recommended strategy
• Allocate 1 minute per point. 100 points = 100 minutes
• That gives you the remaining time to come back to any unfinished problems while
also ensuring that you attempt every problem.
• If you can’t finish a question within the allocated time, move on and come back later.
• Know your strengths and weaknesses.
• At the start of the exam, quickly skim through the exam and identify the major topics
of each problem.
• To build confidence and alleviate some of the anxiety, start out with a topic you’re
strong in
• Then move on to topics in which you’re less confident
• Be sure to attempt the heavily weighted problems.
Good Luck Studying!
• If you have any questions, stop by office hours, post on Piazza, or
send us an email.
• Good luck!!