Available Skills for Accounting Foundations

Institutions can select the skills to be included in the students’ assessment. Students are only tested on skills selected by their institution. For example, some of our academic clients have removed all skills related to Journal entries. Other clients only assess students on the skills in the initial Fundamentals area.

Accounting Foundations consists of one or more questions to assess each skill and instructional web pages to teach and review each skill.

Fundamentals

1. Recognize a balance sheet
2. Recognize an income statement
3. Recognize a cash flow statement
4. Recognize three required statements
5. Know which of the required statements describe time periods instead of points in time
6. Identify the assets portion of a balance sheet
7. Identify the liabilties portion of a balance sheet
8. Identify the equity portion of a balance sheet
9. Define asset
10. Define liability
11. Define equity in the context of a balance sheet
12. Apply the assets = liabilities + equity relation
13. Define paid-in capital in the context of a balance sheet
14. Define retained earnings in the context of a balance sheet
15. Understand that equity has a residual claim on assets
16. Distinguish which facts would be presented in financial statements
17. Distinguish between current and noncurrent assets
18. Distinguish between current and noncurrent liabilities
19. Explain the difference between equity and cash position
20. Define accounts receivable
21. Define inventory
22. Identify the components of equity that can be negative
23. Recognize common synonyms for net income
24. Define fiscal year
25. Recognize the three sections of a Cash Flow Statement

Liabilities and Equity

1. Calculate market capitalization
2. Understand effect of price per share on the balance sheet
3. Identify the financial statements that are affected by issuing dividends
4. Given a balance sheet, calculate working capital
5. Given a balance sheet, calculate debt capital
6. Demonstrate an understanding of the components of paid-in capital for a corporation
7. Distinguish between value of equity account and market capitalization
8. Describe highly leveraged in terms of debt as a fraction of equity capital
9. Distinguish between debt capital and equity capital

Noncurrent Assets

1. Distinguish between tangible and intangible assets
2. Identify examples of noncurrent tangible assets
3. Identify expenditures that would be included in the value of a tangible asset
4. Define service life in the context of depreciation
5. Calculate straight-line depreciation expense rate
6. Show the journal entry for depreciation
7. Distinguish between fair value and book value of an asset
8. Demonstrate an understanding that there is more than one acceptable depreciation method
9. Distinguish between straight-line and accelerated depreciation
10. Know where accumulated depreciation appears on the balance sheet or income statement
11. Show the journal entry for selling an asset at a price that differs than its book value
12. Identify the correct term for writing off the cost on an intangible asset

Accounting for Operations

1. Identify where prepaid expenses appear on the balance sheet and income statement
2. Show how a customer purchase on credit affects the balance sheet
3. Show journal entries for a customer purchase on credit
4. Distinguish between expense and cost
5. Identify transactions that are expenses
6. Describe the relationship between retained earnings and net income
7. Identify accounts that are temporary
8. Distinguish between cash accounting and accrual accounting
9. Know whether public firms may use cash or accrual accounting
10. Identify events that would result in revenue recognition
11. Identify events that would result in expense recognition
12. Identify events that would result in loss recognition
13. Describe how immaterial events are treated expediently
14. Distinguish between the ways expired costs and unexpired costs affect the balance sheet and income statement
15. Show the ledger entry for an expense that increases an accrued liability
16. Identify the financial statements affected by payment of an accrued liability
17. Recognize common synonyms for income statement
18. Define cost of goods sold
19. Define gross margin
20. Calculate EBITDA from an income statement
21. Define net income
22. Define revenues
23. Distinguish between product costs and period costs
24. Contrast the timing of expensing product costs and period costs
25. Calculate Return on Equity (ROE) from an income statement and balance sheet

The Journal

1. Show journal entries for a customer prepaying
2. Show how borrowing money affects the balance sheet
3. Identify the financial statements that would be affected by borrowing money
4. Show how purchasing inventory on credit affects the balance sheet
5. Identify the financial statements that would be affected by purchasing inventory
6. Show how purchase of a noncurrent asset affects the balance sheet
7. Show how paying a dividend affects the balance sheet
8. Distinguish between a debit and a credit in a ledger account
9. Identify accounts that would be increased by a debit
10. Show how a customer's prepayment affects the balance sheet

Cash Flows

1. Distinguish between direct and indirect methods of calculating Cash Flow Statement
2. Describe how depreciation affects the difference between cash flow and pretax income
3. Describe how non-cash working capital affects the difference between cash flow and pretax income
4. Describe how non-cash current assets affect the difference between cash flow and pretax income
5. Describe how current liabilities affect the difference between cash flow and pretax income
6. Identify transactions that are classified as financing activities on the Cash Flow Statement
7. Identify transactions that are classified as investing activities on the Cash Flow Statement
8. Recognize whether positive pretax income implies positive cash flow