FINANCIAL ACCOUNTING D102
Study Guide
Synthesized from your class notes • Units 2–9
How to use this guide: First memorize the debit/credit framework and core formulas. Then
practice journal entries and calculations. Finally, use the self-test at the end without looking
back.
Financial Accounting D102 • Study Guide
, 1. Core Framework: Know This Cold
Assets = Liabilities + Owners’ Equity
Net Income = Revenues − Expenses
Ending Retained Earnings = Beginning Retained Earnings + Net Income −
Dividends
Book Value of PPE = Cost − Accumulated Depreciation
Net Sales = Gross Sales − Sales Discounts − Sales Returns & Allowances
Net Accounts Receivable = Gross A/R − Allowance for Bad Debts
Debit & Credit Cheat Sheet
Account Type Increase Decrease Normal Balance
Assets Debit Credit Debit
Liabilities Credit Debit Credit
Owners’ Equity Credit Debit Credit
Revenue Credit Debit Credit
Expenses Debit Credit Debit
Dividends Debit Credit Debit
Memory shortcut: Assets, Expenses, and Dividends increase with DEBITS. Liabilities, Equity,
and Revenue increase with CREDITS. Every journal entry must have total debits equal total
credits.
2. Unit 2 — Financial Statements
Balance Sheet
Assets are economic resources owned or controlled by the company and are generally listed
in order of liquidity.
Current assets include cash, accounts receivable, inventory, and prepaid expenses.
Long-term assets include long-term investments, PPE, and intangible assets.
Current liabilities are obligations expected to be paid within one year; examples include
accounts payable, wages payable, taxes payable, and the current portion of long-term debt.
Owners’ equity is the residual interest after liabilities are deducted from assets.
Capital stock represents shareholder investment; retained earnings are profits kept in the
business.
Income Statement
Gross Profit = Sales − Cost of Goods Sold
Gross Profit % = Gross Profit ÷ Sales
EPS = Net Income ÷ Number of Shares Outstanding
Revenue is the value of goods/services provided; expenses are resources used to generate
revenue.
For a retailer, COGS is generally the wholesale cost of items sold. For a manufacturer, COGS
includes labor, materials, and manufacturing overhead.
Financial Accounting D102 • Study Guide
Study Guide
Synthesized from your class notes • Units 2–9
How to use this guide: First memorize the debit/credit framework and core formulas. Then
practice journal entries and calculations. Finally, use the self-test at the end without looking
back.
Financial Accounting D102 • Study Guide
, 1. Core Framework: Know This Cold
Assets = Liabilities + Owners’ Equity
Net Income = Revenues − Expenses
Ending Retained Earnings = Beginning Retained Earnings + Net Income −
Dividends
Book Value of PPE = Cost − Accumulated Depreciation
Net Sales = Gross Sales − Sales Discounts − Sales Returns & Allowances
Net Accounts Receivable = Gross A/R − Allowance for Bad Debts
Debit & Credit Cheat Sheet
Account Type Increase Decrease Normal Balance
Assets Debit Credit Debit
Liabilities Credit Debit Credit
Owners’ Equity Credit Debit Credit
Revenue Credit Debit Credit
Expenses Debit Credit Debit
Dividends Debit Credit Debit
Memory shortcut: Assets, Expenses, and Dividends increase with DEBITS. Liabilities, Equity,
and Revenue increase with CREDITS. Every journal entry must have total debits equal total
credits.
2. Unit 2 — Financial Statements
Balance Sheet
Assets are economic resources owned or controlled by the company and are generally listed
in order of liquidity.
Current assets include cash, accounts receivable, inventory, and prepaid expenses.
Long-term assets include long-term investments, PPE, and intangible assets.
Current liabilities are obligations expected to be paid within one year; examples include
accounts payable, wages payable, taxes payable, and the current portion of long-term debt.
Owners’ equity is the residual interest after liabilities are deducted from assets.
Capital stock represents shareholder investment; retained earnings are profits kept in the
business.
Income Statement
Gross Profit = Sales − Cost of Goods Sold
Gross Profit % = Gross Profit ÷ Sales
EPS = Net Income ÷ Number of Shares Outstanding
Revenue is the value of goods/services provided; expenses are resources used to generate
revenue.
For a retailer, COGS is generally the wholesale cost of items sold. For a manufacturer, COGS
includes labor, materials, and manufacturing overhead.
Financial Accounting D102 • Study Guide
