Simon Fraser University - ACCOUNTING 3310 Unit 1 Study Guide U1M1     Q: What are the three essential characteristics of accounting? Q: Define financial accounting? Q: What is Managerial Accounting? Q: Identify the common financial statements prepared? Q: Identify the common methods of financial reporting? Q: Identify the common methods of business reporting? Q: What is the correlation between Financial Statement info and Capital Allocation? Q: Define the term “stakeholders” and identify who the stakeholders are in the preparation of financial information Q: Identify the objectives of financial statements: Q: What is the Decision Usefulness Approach?  Q: What are the three things that financial statements should provide information about? Q: What is management stewardship? Q: What is the entity perspective? Q: What is proprietary perspective? Q: What is Accrual-Basis Accounting? Q: What is information Asymmetry? Q: What are some reasons for information Asymmetry? Q: Two types of information asymmetry problems:  Q: Problems that result from info asymmetry: Q: Some of the possible motivations for management bias? Q: Two ways to avoid management bias and ensure information is being reported ethically? Q: What is the Efficient Markets Hypothesis? U1M2: Q: Why is there a need to develop standards? Q: Canadian Accounting Standards Board (AcSB)? Q: International Accounting Standards Board? Q: What are the elements of High-Quality accounting standards? Q: What is SOX? Q: What is Canada’s response to SOX? Q: Steps that help in the process of developing resolving ethical dilemmas are as follows: Q: Challenges and Opportunities for the Accounting Profession? Q: What is GAAP? Q: Where is GAAP Found? Q: What is the GAAP hierarchy (private, not-for-profit, pension plans)? Q: What is the GAAP hierarchy for public entities? Q: Explain the significance of professional judgement in applying GAAP BE 1-6 What is the value of having a common set of standards in financial accounting and reporting? BE 1-10 Explain the role of the Canadian Accounting Standards Board (AcSB) in establishing generally accepted accounting principles BE 1-15 Some individuals have argued that all Canadian companies should follow the same set of accounting principles

Simon Fraser University - ACCOUNTING 3310

Unit 1 Study Guide
U1M1    

Q: What are the three essential characteristics of accounting?
Q: Define financial accounting?
Q: What is Managerial Accounting?
Q: Identify the common financial statements prepared?
Q: Identify the common methods of financial reporting?
Q: Identify the common methods of business reporting?
Q: What is the correlation between Financial Statement info and Capital Allocation?
Q: Define the term “stakeholders” and identify who the stakeholders are in the preparation of financial information
Q: Identify the objectives of financial statements:
Q: What is the Decision Usefulness Approach? 
Q: What are the three things that financial statements should provide information about?
Q: What is management stewardship?
Q: What is the entity perspective?
Q: What is proprietary perspective?
Q: What is Accrual-Basis Accounting?
Q: What is information Asymmetry?

Q: What are some reasons for information Asymmetry?
Q: Two types of information asymmetry problems: 
Q: Problems that result from info asymmetry:
Q: Some of the possible motivations for management bias?
Q: Two ways to avoid management bias and ensure information is being reported ethically?
Q: What is the Efficient Markets Hypothesis?
U1M2:

Q: Why is there a need to develop standards?
Q: Canadian Accounting Standards Board (AcSB)?
Q: International Accounting Standards Board?
Q: What are the elements of High-Quality accounting standards?
Q: What is SOX?
Q: What is Canada’s response to SOX?
Q: Steps that help in the process of developing resolving ethical dilemmas are as follows:
Q: Challenges and Opportunities for the Accounting Profession?
Q: What is GAAP?
Q: Where is GAAP Found?
Q: What is the GAAP hierarchy (private, not-for-profit, pension plans)?
Q: What is the GAAP hierarchy for public entities?
Q: Explain the significance of professional judgement in applying GAAP
BE 1-6
What is the value of having a common set of standards in financial accounting and reporting?
BE 1-10
Explain the role of the Canadian Accounting Standards Board (AcSB) in establishing generally accepted accounting principles

BE 1-15
Some individuals have argued that all Canadian companies should follow the same set of accounting principles. Explain why there are multiple sets of standards?
BE1-20
What is the difference between principles-based and rules-based accounting standards? In which category does IFRS belong? ASPE? Explain
CA1-1
When the AcSB issues new standards, the implementation date is usually 12 months after the issue date, but early implementation is encouraged. In this case, Paula Popov, controller, is discussing with her financial vice-president the need for early implementation of standards that would result in fairer representation of the company's financial position. When the financial vice-president determines that early implementation of standards will lower the reported net income for the year, he discourages Popov from implementing the standard until it is required. Discuss the ethical issues.

WA1-5
Nortel Networks Inc, the former telecommunications giant, was accused of misstating its financial statements. The auditors for the company signed audit reports in which they stated that the financial statements of the company were fairly presented. How is it possible that a company can misrepresent its financial statements and still receive "clean" audit opinion from its auditors?

U1M3
Q: What is a Conceptual Framework?
Q: Why is there a need for a conceptual framework?
2 

Q: Conceptual Framework and Information Asymmetry?
Q: First Level: Objectives
Q: Second Level: Fundamental Concepts- Qualitative Characteristics
Q: What are the Enhancing Qualities complementary to the fundamental qualitative characteristics?
Q: Second Level: Fundamental Concepts- Basic Elements
Q: Assets
Q: Liabilities
Q: Equity/Net Assets: 
Q: Revenues:

Q: Expenses:
Q: Gains: 
Q: Losses: 

Third Level: Foundational Principles
Q: Recognition/ Derecognition?

Q: Measurement?
Q: Presentation and Disclosure
Case 2-1

Relevance and Representational Faithfulness    
Case 2-2
c. Revenue Recognition and Realization     

Exercise 2-8
a. Explain the meaning and implication of the full-disclosure principle  and how such information may be provided to users?
b. For each of the situations, discuss whether Brittany has followed acceptable accounting and disclosure practices:

P 2-5

State whether you agree with each of the accounting decisions made by Sheridan Corporation. Explain your reasoning:

Q: Accounting Information System: 
Q: Double Entry Accounting: 
Q: Accounting Equation?
Q: Steps in the Accounting Cycle? 
Q: Analyze Transactions and Events?
Q: Journals?
Q: Posting?
Q: Trial Balance?
U1M5
Q: What type of accounts are affected in adjusting entries?

Q: What are three types of adjusting entries? 
Q: What account will an adjusting entry never effect?
A: Cash, although a correcting entry may affect cash

Q: Why are adjusting entries made?
Q: Adjusting entries for prepaid expenses:
Q: Adjusting entry for unearned revenue:
Q: What are an Accrued Liability and Accrued Asset?
Q: Adjusting Entry for Accrued Revenues
Q: Adjusting Entry for Accrued Expenses
Q: What are estimated items:
Q: When is an adjustment needed for inventory?
Q: A typical inventory adjusting/closing entry would include debits and credits to the following accounts:

U1M6
Q: What does it mean to close the books?
Q: What are the steps to recording and posting of closing entries.
Q: Post-Closing Trial Balance?
Q: What are Reversing Entries?
Q: What types of adjusting entries would be reversed? 
Exercise 3-2
General Journal:

Exercise 3-3- Adjusting Entries
?    Employees paid every Friday for five-day work week ending on that day. Salaries and wages amount to $2,400 per week. The accounting period ends on a Thursday.
?    On Oct 1, 2014, Yuppy borrowed $8,000 cash by signing note payable due in one year at 8% interest. Interest is due when the principal is paid.
Dec 31    Interest Receivable            
        Interest Revenue        
    
*Accrued Revenues: Revenue earned as not been collected or recorded. Asset is understated and Revenue is understated.
?    A portion of Yuppy’s parking lot is used by executives of a neighbouring company. A person pays $6 per day for each day’s use and the parking fees are due by the fifth business day following the month of use. The fees for December 2014 amount to $1,260.

Exercise 3-4-Adjusting Entries
?    An insurance premium of $8,000 was paid on April 1, 2014 and was charged to Prepaid Insurance. The premium covers a 24-month period beginning April 1, 2014.
?    Office Supplies account showed a balance of $3,500 at the beginning of 2014. Office supplies costing $12,000 were purchased during 2014 and debited to the asset account. Office supplies of $2,200 were on hand at December 31, 2014.
?    On July 1, 2014, cash of $48,000 was received from subscribers (customers) for a 36-month subscription period beginning on that date. The receipt was recorded by a debit to Cash and a credit to Unearned Subscription Revenue. 
?    At the beginning of 2014, the Unearned Advertising Revenue account had a balance of $75,000. During 2014, collections from advertisers of $800,000 were recorded by credits to Advertising Revenue. At the end of 2014, revenue received but not earned are calculated to be $51,000.
Exercise 3-5
Alterative Treatment to Prepaid Expenses and Unearned Revenue
E3-5
1) Office Supplies recorded in an asset account when acquired
2) Office Supplies recorded in an expense account when acquired
Office Supplies on Hand- $400
Cash Purchases of Office Supplies- $900
Office Supplies at end of the period- $320
3) Receipts from customers for magazine subscriptions recorded as liability
4) Receipts from customers for magazine subscriptions recorded as a revenue
Unearned Subscription Revenue Beg $6,700
Received $54,000 to USR
Balance at end of period is $8,000

3-6
General Journal
Bond Calculation: