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How to Pass study.com Accounting 101: Financial Accounting Final Proctored Exam

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  • How to Pass study.com Accounting 101: Financial Accounting Final Proctored Exam
Accounting 101
  • Gavin Walton
  • July 19, 2024

Hey there, future accounting whiz! Hi and welcome to your one-stop source on how to get excellent scores in the study.com Accounting 101: Financial Accounting” course. Whether you are a complete beginner or you already know the basics but have forgotten, you will find what you are looking for here. Hence, this article is created to be your guide and friend in your personal quest to get a better grasp of financial accounting which is both interesting and easy to read. Imagine that this guide is your teacher, who will always be with you anytime you need him or her, ready to explain the concepts you do not understand or to answer your questions, and at times even give you some jokes to lighten your day.

Accounting is thought to be a complicated area of knowledge for most people at first sight. You observe all those numbers, terms, and formulas and you ask yourself, “Oh my, how will I ever pass this?” Lucky for you! This study. com Accounting 101: Financial Accounting course is designed to transform a complete novice into an accounting master in the shortest amount of time possible. We will provide you with a breakdown of the main points concerning financial accounting. We will next explore the basic principles of the subject. Starting from the initial concepts of the accounting cycle to comprehending complex evaluations of financial statements, this course provides it all. When you are through you can be sure to excel in your exam and understand how to go about the subject in real life experiencing growth in your job. Regardless of whether you desire a career in the accounting or finance field or you find the topic interesting enough to manage your finances on your own, this class is your starting point. Ready to embark on this accounting adventure? Let’s get started!

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Course Overview: What to Expect from Accounting 101 📖

So, what should you expect in “study.com Accounting 101: Financial Accounting”? This course is designed and developed to the letter to make sure that when you are done, you understand everything that has to do with financial accounting right from the basics to the more detailed aspects. 

  1. Accounting Overview: You will begin with the basics of accounting and acquire knowledge about its meaning and significance in modern business reality. This forms the base of everything else that you will be taught.

  2. Financial Statements: Let me introduce you to some of your favorite friends – the balance sheet, income statement, statement of owner’s equity, and statement of cash flows. These documents can be considered as the key source of financial reporting and analysis.

  3. The Accounting Cycle: This is where things get a bit more technical. You’ll explore the step-by-step process that companies follow to track their financial transactions, from journal entries to preparing financial statements.

  4. Adjusting Accounts and Preparing Financial Statements: Learn how to make necessary adjustments to accounts to ensure accurate financial reporting.

  5. Internal Controls: Discover the mechanisms that companies use to safeguard their assets and ensure the integrity of their financial data.

  6. Merchandising Operations and Inventory: This part is especially relevant for enterprises that deal in products. It will include information concerning inventory, costing techniques such as Lower of Cost or Offer (LCFO) and First In First Out (FIFO), and handling of sales accounts.

  7. Receivables: Understand how companies handle the money owed to them, including dealing with uncollectible accounts.

  8. Operating Cycle: Learn how companies manage their short-term assets and liabilities to ensure smooth operations.

  9. Long-Term Assets: Dive into how businesses acquire, use, and depreciate long-term assets like property and equipment.

  10. Current and Long-Term Liabilities: Differentiate between short-term and long-term obligations and how they impact a company’s financial health.

  11. Reporting and Analyzing Equity: Get to grips with stockholder equity, how it’s reported, and why it matters.

  12. Statement of Cash Flows: This is crucial for understanding a company’s liquidity and financial flexibility. You’ll learn how to prepare and analyze cash flow statements.

  13. Financial Statement Analysis: This is where all your hard work comes together. You’ll learn how to analyze financial statements to make informed decisions about a company’s performance and health.

  14. Study Tips and Strategies: This is the concluding step where all the facilitations laid down are synthesized. You will also learn how to read financial statements with the view of being in a position to decide whether the life of that company is still viable or not.

When you complete this course, you will be well informed on the subject of financial accounting. It is not just studying for an exam here; what you get is knowledge that is helpful in your working life. Also, beware that concepts such as the accounting cycle and financial statement analysis will be covered more than once. undefined Alright, let’s break this up step by step!

study.com Accounting 101
study.com Accounting 101
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Week-by-Week Study Plan to Ace Your Exam📝

It is time to divide the study schedule into smaller parts that are easy to follow. When using this breakdown, you will be able to work through the week and have a clear sequence of materials to study without getting stressed. Here we go:

Week 1: Get Started with the Basics

  • Topics: Accounting Overview and Financial Statements
  • Activities:
    • Watch introductory videos on YouTube
    • Read chapters on accounting fundamentals and financial statements from your study.com materials.
    • Start using flashcards from Quizlet on basic accounting terms.
  • Resources:

Week 2: Dive into the Accounting Cycle

  • Topics: The Accounting Cycle
  • Activities:
  • Follow along with step-by-step tutorials on the accounting cycle.
  • Practice journal entries and ledger postings.
  • Complete exercises and quizzes on study.com.
  • Resources:

Week 3: Adjusting Accounts and Preparing Financial Statements

  • Topics: Adjusting Entries and Financial Statement Preparation
  • Activities:
  • Read about different types of adjusting entries.
  • Watch tutorials on preparing financial statements.
  • Practice making adjusting entries and preparing a mock financial statement.
  • Resources:

Week 4: Explore Internal Controls

  • Topics: Internal Controls in Accounting
  • Activities:
  • Study the principles of internal controls and their importance.
  • Watch case studies on internal controls in real companies.
  • Take quizzes on study.com to test your understanding.
  • Resources:

Week 5: Merchandising Operations and Inventory

  • Topics: Merchandising Operations and Inventory Management
  • Activities:
  • Learn about FIFO, LIFO, and other inventory costing methods.
  • Practice inventory calculations and understand their impact on financial statements.
  • Complete exercises and quizzes on study.com.
  • Resources:

Week 6: Accounts Receivable and Operating Cycle

  • Topics: Receivables and Operating Cycle
  • Activities:
  • Study the management of accounts receivable.
  • Understand the operating cycle of a business.
  • Practice problems related to receivables and the operating cycle.
  • Resources:

Week 7: Long-Term Assets and Liabilities

  • Topics: Long-Term Assets and Liabilities
  • Activities:
  • Learn about the acquisition, use, and depreciation of long-term assets.
  • Study the differences between current and long-term liabilities.
  • Complete related exercises on study.com.
  • Resources:

Week 8: Reporting and Analyzing Equity

  • Topics: Stockholder Equity and Financial Analysis
  • Activities:
  • Understand the components of stockholder equity.
  • Learn how to analyze financial statements using various ratios.
  • Practice financial ratio calculations.
  • Resources:

Week 9: Statement of Cash Flows

  • Topics: Cash Flow Statements
  • Activities:
  • Study the components and preparation of cash flow statements.
  • Practice creating cash flow statements from sample data.
  • Take quizzes on study.com.
  • Resources:

Week 10: Final Review and Practice Exams

  • Topics: Comprehensive Review
  • Activities:
  • Review all key concepts and formulas.
  • Take practice exams to test your knowledge and timing.
  • Identify any weak areas and revisit those topics.
  • Resources:

Follow this study plan diligently, and you’ll be well-prepared to ace your “study.com Accounting 101: Financial Accounting” exam!

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Supplementary Study Resources 📂

Well, everyone has to know where to find extra tools if they’re available so it’s no bad thing to have extra links like that. Here are some free resources available on the internet to help you understand difficult concepts in this class:

YouTube Channels and Playlists

  • Accounting Stuff – This channel offers clear and concise explanations on various accounting topics, perfect for visual learners.
  • Edspira – A great resource for comprehensive lessons on financial accounting, complete with examples and step-by-step instructions.
  • CPA Strength – Focuses on teaching accounting concepts with real-world examples, making it easier to grasp complex topics.
  • Accounting Instruction, Help, & How To – Offers detailed videos on a wide range of accounting topics, from basics to advanced concepts.

Quizlet Flashcards

  • Accounting Basics Flashcards – A collection of flashcards to help you memorize essential accounting terms and definitions.
  • Accounting Cycle Flashcards – Useful for understanding the steps in the accounting cycle and practicing journal entries.
  • Adjusting Entries Flashcards – Helps you get a grip on different types of adjusting entries and their impact on financial statements.
  • Inventory Management Flashcards – Focuses on inventory costing methods like FIFO and LIFO, crucial for merchandising operations.

Articles and Guides

  • Investopedia – Accounting Basics – A comprehensive guide covering the fundamentals of accounting, perfect for beginners.
  • AccountingCoach – Offers free tutorials and quizzes on various accounting topics, making it an excellent supplementary resource.
  • The Balance – Small Business Accounting – Provides practical accounting advice and tips for small business owners, which can be helpful for real-world applications.

When used in combination with your study, these are some of the external resources that may be helpful to you. Continue using these sources as reference materials to increase your understanding of the topics taught in class.

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Essential Topics to Master🎓

Accounting 101; Financial Accounting’ is a fundamental course that you cannot afford to lag behind in as it has vital topics that you must grasp. It is time to better understand some of the fundamental concepts, compare certain topics, and show you examples related to these concepts.

Key Financial Statements

  • Balance Sheet: Reports a company’s assets, liabilities, and stockholders’ equity at a specific point in time.
  • Income Statement: This shows the company’s revenues and expenses during a particular period.
  • Statement of Cash Flows: Provides a summary of cash inflows and outflows over a period, categorized into operating, investing, and financing activities.
  • Statement of Owner’s Equity: Details changes in equity from net income (or loss) and dividends over a period.

Comparing Depreciation Methods

Method
Calculation
Best For
Straight-Line
(Cost - Salvage Value) / Useful Life
Assets with consistent usage
Double-Declining
2 x (Straight-Line Depreciation Rate) x Book Value at Beginning of Year
Environmental sustainabilitAssets that lose value quickly
Units of Production
(Cost - Salvage Value) / Total Estimated Units of Production x Units Produced in the Period
Manufacturing equipment, social justice

Example: A company buys machinery for $10,000, and expects it to last 10 years with a salvage value of $1,000.

  • Straight-Line: ($10,000 – $1,000) / 10 = $900/year.
  • Double-Declining: 2 x (1/10) x $10,000 = $2,000 first-year depreciation.
  • Units of Production: If the machine is expected to produce 100,000 units, and it produces 10,000 units in the first year, depreciation is (($10,000 – $1,000) / 100,000) x 10,000 = $900.

Liquidity Ratios

Ratio
Formula
Interpretation
Current
Current Assets / Current Liabilities
Ability to pay short-term obligations
Quick
(Current Assets - Inventory) / Current Liabilities
More stringent measures of liquidity
Cash
Cash / Current Liabilities
Company’s ability to pay off short-term debts with cash on hand

Example: A company has $50,000 in current assets, $30,000 in inventory, and $20,000 in current liabilities.

  • Current Ratio: $50,000 / $20,000 = 2.5 (healthy liquidity)
  • Quick Ratio: ($50,000 – $30,000) / $20,000 = 1 (adequate liquidity without relying on inventory)
  • Cash Ratio: $10,000 (cash) / $20,000 = 0.5 (less cash available to cover debts)

Comparing LIFO and FIFO Inventory Methods

Method
How It Works
Impact on Financials
FIFO
First In, First Out: Oldest inventory sold first
Higher profits in times of rising prices, higher taxes
LIFO
Last In, First Out: Newest inventory sold first
Lower profits in times of rising prices, lower taxes

Example: In periods of inflation, choosing FIFO means that the cost of sales shows a lower price construct based on the earliest goods purchased, and hence the business realizes higher profit and tax dues. LIFO on the other hand, identifies revenue with the newer, higher, cost which reduces profit and in due course taxes.

Real-World Application: Ratio Analysis for Decision Making

Suppose you are considering two firms from the same sector in which you wish to invest; Currently, the current ratio of Company A stands at 1.8, and the debt to equity ratio of 0.5 and on the other hand, Company B has 1.2 for the current ratio and a debt to equity ratio of 1.0.

  • Company A: Better liquidity and lower leverage, indicating it can cover its short-term obligations and is less reliant on debt.
  • Company B: Lower liquidity and higher leverage, suggesting more risk due to higher debt.

If those key topics with comparisons, tables, and realistic examples are followed, you will be more equipped to proceed to your “Accounting 101: Financial Accounting” examination.

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Frequently Asked Questions (FAQ)❓

Q: What is the best way to study for the Accounting 101 exam?

A: Furthermore, it is important to schedule time to study that should be followed as recommended by the literature. Divide content information into chunks, create flashcards with significant terms, utilize previous years’ papers, and engage with external materials such as YouTube videos, and Quizlet cards. Consistent review and practice will help solidify your understanding.

 

Q: How important are the financial statements in this course?

A: Financial statements are crucial. They are the backbone of accounting and will be a significant part of your exams. Understanding how to read, interpret, and prepare these statements is essential. Focus on the balance sheet, income statement, statement of cash flows, and statement of owner’s equity.

 

Q: What is the importance of liquidity ratios?

A: The current ratio and the quick ratio are the most commonly used liquidity ratios to assess the organization’s capacity to pay its smaller and faster short-term debts. They are some of the key financial ratios of any organization and are common questions in exams. A high current ratio points to good liquidity whereas the quick ratio which is even more rigorous by for example excluding inventory yields a higher ratio.

 

Q: Can you explain the concept of retained earnings?

A: Retained earnings represent the cumulative amount of net income that a company retains rather than distributing it as dividends to shareholders. It is a key component of the statement of owner’s equity and indicates how much profit a company reinvests in itself.

 

Q: How are non-cash activities reported?

A: Another type of activity that exists in an organization is non-cash activities and it must be presented in the financial statements through these journals The acquisition of assets by employing leases or by exchanging the stock in an organization is also another practice that is recorded in the financial statements. An analysis of these is common in the notes section of the cash flow statement for a complete view of a firm’s operations.

By addressing these FAQs, you can gain a better understanding of the key concepts in “Accounting 101: Financial Accounting” and be better prepared for your exams.

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Conclusion 📄

This sums up our detailed breakdown of “Accounting 101- Financial Accounting” which is available here on Study. com. The goal of this course is to provide you with the basic concepts relative to financial accounting. This guide is perfect whether you want to increase your chances of passing the assessment or improve coverage of financial concepts.

To recap, we started with an overview of the course and what to expect. We provided a week-by-week study plan, emphasizing structured learning and consistent practice. We highlighted key external resources, like YouTube channels and Quizlet flashcards, to help you grasp difficult concepts. We also focused on crucial topics such as liquidity ratios, depreciation methods, and inventory management techniques. Addressing common questions, we aim to ensure you’re well-prepared for any challenges.

Remember, with the right approach and resources, you can master accounting. Keep revisiting materials, practicing problems, and using this guide as a reference. Best of luck, and happy studying!

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