Objectives: Chapter Four
The following learning objectives for this chapter map to the curriculum design for our online university-level courses. These courses are offered through Utah State University, and result in the awarding of up to 6 hours of highly transferrable college credit. To learn more, check out the classroom link.
Preparation of financial statements.
Why might an unadjusted trial balance be inappropriate for preparation of correct financial statements?
Who would normally be in a position to suggest adjusting entries?
Describe how a trial balance might be updated for adjusting entries?
Understand how financial statements are generated from an adjusted trial balance.
Have a general awareness of how computer software can be used to facilitate financial statement preparation.
When and why might one use a worksheet for preparation of financial statements.
Know the appropriate worksheet columns into which amounts from the adjusted trial balance are to be extended.
How are profits and losses determined and presented in the worksheet?
The accounting cycle and closing process.
Articulate the steps in a the accounting cycle process.
When and why are the books "closed?"
Define temporary (nominal) and real accounts.
Be able to prepare closing entries related to revenues, expenses, the Income Summary, and the Dividend account.
What benefit is a post-closing trial balance, and what type of accounts would be found there?
The nature of "optional" reversing entries.
When and why might reversing entries be used?
Are reversing entries mandatory?
Demonstrate, by example, the use of reversing entries, versus no reversing entries.
Classified balance sheets.
What is included in the appropriate heading for a balance sheet?
In order, list the classifications for assets on a classified balance sheet.
In order of presentation, name five typical current assets.
Cite examples of long-term investments.
Be able to prepare the property, plant, and equipment section of a balance sheet (notice accumulated depreciation).
What types of items would be found in the intangible assets and other assets sections of the balance sheet?
What two key categories distinguish liabilities on the balance sheet?
Name three entity forms and note their significance to the equity section on the balance sheet.
Illustrate a simplified equity section for a corporation, and describe the nature of capital stock, retained earnings, and dividends.
What types of items are discussed in the notes to the financial statements?
What is meant by the term "full disclosure?"
The importance of business liquidity and the concept of an operating cycle.
What is meant by the term "liquidity?"
What is working capital?
How is the current ratio calculated?
How is the quick ratio calculated?