xam 1 Review Sheet The exam consists of 26 multiple choice questions and 3 open ended questions. Connect Resources: Chapter 1 and 2 Smartbook: RECHARGE Chapter 1 and 2 Homework: STUDY Chapter 1 and 2 Concept Overview Videos Exam #1 Practice Problems Chapter 1Environment and Theoretical Structure of Financial Accounting Describe the function and primary focus of financial accounting Explain the difference between cash and accrual accounting Define generally accepted accounting principles (GAAP) Explain why establishing accounting standards is characterized as a political process Explain factors that encourage high-quality financial reporting Explain the purpose of the conceptual framework Identify the objective and qualitative characteristics of financial reporting information and the elements of financial statements Describe the four basic assumptions underlying GAAP Describe the recognition, measurement, and disclosure concepts that guide accounting practice Discuss the primary differences between U.S. GAAP and IFRS with respect to the development of accounting standards and the conceptual framework underlying accounting standards Chapter 2: Review of the Accounting Process Understand routine economic eventstransactionsand determine their effects on a companys financial position and on specific accounts Describe the steps in the accounting processing cycle Analyze and record transactions using journal entries Post the effects of journal entries to general ledger accounts and prepare an unadjusted trial balance Identify and describe the different types of adjusting journal entries Record adjusting journal entries in general journal format, post entries, and prepare an adjusted trial balance Describe the four basic financial statements Explain the closing process and be able to record closing entries