Midterm practice, all in one place.
A mock midterm from every chapter, endless fresh-number questions you can filter by chapter, and a one-page sheet of every rule and ratio.
A mock midterm, then endless drills
The question set is a mock midterm drawn from every chapter. Fresh numbers writes a new question every time: pick a chapter to drill it, or leave it on Mixed.
Every rule and ratio, on one page
Read it the night before. If a line feels unfamiliar, open that chapter's tool and redo its steps.
Statements and the equation
- Assets = Liabilities + Shareholders' equityEquity = share capital + retained earnings.
- Net income = Revenues − ExpensesDividends declared are never an expense.
- Ending RE = Opening RE + Net income − Dividends declaredUse it backwards to find net income.
- Order: income → changes in equity → financial position; cash flows ends with the cash on the financial position.Financial position = one date; the other three = a period.
- Cash flows: operating, investing, financing.Loans, shares, dividends = financing; long-term assets = investing.
- Working capital = Current assets − Current liabilities
- Profit margin = Net income ÷ Revenues
- ROA = Net income ÷ Average total assets · ROE = Net income ÷ Average equityAverage = (opening + ending) ÷ 2.
- Useful information: relevant (incl. materiality) and faithfully represented (complete, neutral, free from error).Enhancing: comparability, verifiability, timeliness, understandability. Constraint: cost.
- Accrual basis: revenue when earned, expenses when incurred, not when cash moves.
- IFRS for public companies; ASPE optional for private ones (they show a statement of retained earnings instead of changes in equity).
Double entry and the cycle
- Debit (left) increases assets, expenses, dividends declared.These have normal debit balances.
- Credit (right) increases liabilities, common shares, retained earnings, revenues.Contra assets (accumulated depreciation, allowance) have credit balances.
- Cycle: chart of accounts → opening balances → analyse → journalise → post → trial balance → adjust → adjusted TB → statements → close.
- Deferrals (cash first): prepaid expenses, unearned revenue, depreciation. Accruals (cash later): accrued revenues, accrued expenses.An adjusting entry never touches cash, and pairs one income-statement account with one financial-position account.
- Depreciation = (Cost − Residual value) ÷ Useful lifeCarrying amount = cost − accumulated depreciation.
- Interest = Principal × Annual rate × Months ÷ 12
- Closing: Dr revenues, Cr Income Summary · Dr Income Summary, Cr expenses · Dr Income Summary, Cr Retained Earnings · Dr Retained Earnings, Cr Dividends Declared.After closing only permanent accounts have balances.
- A balanced trial balance does not prove there are no errors.Omitted entries, wrong accounts and equal errors on both sides slip through.
Revenue and the statement of income
- Five steps: contract → performance obligations → transaction price → allocate → recognise when (or as) each obligation is satisfied.
- Allocated price = Transaction price × Item's stand-alone price ÷ Total stand-alone prices
- Multi-step: Sales − COGS = Gross profit; − operating expenses = Income from operations; ± other items = Income before tax; − income tax = Net income.
- Comprehensive income = Net income + Other comprehensive income
- Basic EPS = (Net income − Preferred dividends) ÷ Weighted average common sharesShares issued mid-year count only for the months outstanding.
- Right of return: revenue only for goods not expected back; a refund liability for the rest. Assurance warranty: accrue warranty expense and a liability.
- Agent: revenue = its commission only. Consignment: the consignor records the sale when the consignee sells. Service warranty: unearned revenue over the term.
Cash and receivables
- Bank side: balance per bank + outstanding deposits − outstanding cheques ± bank errors.
- Book side: balance per books + EFT collections, interest − service charges, NSF cheques, automatic payments ± company errors.Both reach the same adjusted balance. Only book-side items get journal entries.
- Credit losses = Required allowance − Existing allowance balanceA debit balance in the allowance adds to the entry.
- Write-off: Dr Allowance, Cr A/R. No effect on expense or on the carrying amount.Recovery: Dr A/R, Cr Allowance; then Dr Cash, Cr A/R.
- Carrying amount of A/R = A/R − Allowance for expected credit lossesDirect write-off (Dr Credit Losses, Cr A/R) only when amounts are immaterial.
- Cash equivalents: very liquid, maturing within 3 months of purchase (e.g. treasury bills).
- Current ratio = CA ÷ CL · Quick ratio = (CA − Inventory − Prepaids) ÷ CL
- A/R turnover = Credit sales ÷ Average A/R · Average collection period = 365 ÷ A/R turnover
- Control principles: physical controls, assignment of responsibilities, separation of duties, independent verification, documentation.
Inventory
- COGS = Beginning inventory + Purchases − Ending inventoryBeginning inventory + purchases = cost of goods available for sale.
- FIFO: the oldest costs go to COGS. Weighted average: cost available ÷ units available, recomputed after each purchase in a perpetual system.
- Rising prices: FIFO gives lower COGS, higher ending inventory, higher net income than weighted average.No LIFO in Canada.
- Lower of cost or NRV: write down to NRV if it is lower: Dr COGS, Cr Inventory.A later recovery can be reversed, but never above original cost.
- Ending inventory overstated → COGS understated → net income overstated this year, understated next year.Retained earnings is right again after two years.
- Gross margin ratio = Gross margin ÷ Sales revenueGross margin method (3rd edition): estimated COGS = sales × (1 − gross margin ratio); estimated inventory = goods available − estimated COGS.
- Inventory turnover = COGS ÷ Average inventory · Days to sell = 365 ÷ Inventory turnover
- FOB shipping point: the buyer owns goods in transit. FOB destination: the seller does. Consigned goods belong to the consignor.
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