Question

Put yourself in my shoes©) You want to prepare an EXAM for Financial Accounting course, and you have to prepare the ANSWER KEY as well.

1. You are required to prepare 10 different transaction analysis (you are expected to make up transaction analysis) and show their effects on assets, liabilities, and owner's equity (50 points).
2. You are required to prepare 10 different transaction analysis for a company. Record your general journal entries and record your ledger accounts (50 points).

Answer 1

In creating a Financial Accounting exam, one must prepare transaction analyses with effects on assets, liabilities, and owner's equity, and provide journal entries and ledger updates. Including components that allow students to use the money multiplier formula and analyze T-account balance sheets, as well as evaluate risks in finance, is also advisable.

Step-by-step explanation:

Creating an Exam for a Financial Accounting Course

When preparing an exam for a Financial Accounting course, it is essential to include transaction analysis that demonstrates the understanding of the effects of business transactions on assets, liabilities, and owner's equity. Additionally, creating journal entries and ledger accounts for various transactions is crucial for testing students' practical knowledge of accounting. For example, a transaction analysis could be a company purchasing inventory for cash, where assets increase on one side (inventory) and decrease on another (cash), and this would not affect liabilities or owner's equity. Recording the journal entry would involve debiting inventory and crediting cash. Ledger accounts would need to be updated accordingly to reflect these changes.

When designing such an exam, it's also beneficial to incorporate scenarios where students can utilize the money multiplier formula to determine how banks create money, analyze and create T-account balance sheets, and evaluate the risks and benefits of money and banks. These components help students to understand the broader financial implications and the operational aspects of financial institutions.

Moreover, considering how transaction analysis affects financial statements allows students to appreciate the risk involved in different types of financial assets and the important considerations for investors in the financial market. For instance, a question might describe how the Federal Reserve's open market operations, such as purchasing treasury bonds, impact a bank's balance sheet, prompting analysis of the subsequent effects on the bank's ability to extend new loans.