Preparing for an accounting exam takes more than memorizing definitions. We need to recognize a transaction, identify the correct accounting method, and explain how the numbers fit together.
At Dee & Dee Brown LLC, we connect what we learn in ACC 111 Financial Accounting to practical examples from running a resale business.
During our Fall 2026 preparation for ACC 111 Exam #2 at Washtenaw Community College, Professor Karsten's review sheet identified four major long-problem areas and five multiple-choice topic areas.
The exam review described 20–35 problems worth 150 points. We turned those topics into a printable study workbook and practice questions that we could solve, check, and repeat.
Four major ACC 111 Exam #2 problem types
Professor Karsten identified these four subjects for longer problems. We practiced each one step by step using original business examples:
- Bank reconciliation: Adjust the bank and book cash balances.
- Merchandising journal entries: Record purchases, sales, discounts, returns, allowances, and shipping charges.
- Perpetual inventory: Complete an inventory table using FIFO or LIFO.
- Strategies for managing cash: Evaluate cash needs and select sensible cash-management actions.
1. Bank reconciliation: Which balance do we adjust?
A bank reconciliation explains why a bank statement and a company's Cash account may show different balances. Deposits in transit are added to the bank balance, and outstanding checks are subtracted. On the book side, we add unrecorded interest or bank collections and subtract unrecorded fees and NSF checks.
Practice example: Dee & Dee Brown LLC has an $8,500 bank statement balance, a $1,200 deposit in transit, and $950 in outstanding checks.
Adjusted bank balance: $8,500 + $1,200 − $950 = $8,750 .
The books initially show $8,160. The bank recorded $60 interest, a $765 note collection, a $35 service charge, and a $200 NSF check.
Adjusted book balance: $8,160 + $60 + $765 − $35 − $200 = $8,750 .
Both sides agree. Our next step is to prepare any necessary book-side journal entries .
2. Merchandising journal entries: Remember the second entry
Under a perpetual inventory system , a sale of merchandise generally requires two entries: one records the sale, and the second moves the item's cost from Merchandise Inventory to Cost of Goods Sold (COGS).
For example, if we sell an item on account for $300 and its cost was $180, we record:
- Debit Accounts Receivable $300; credit Sales Revenue $300.
- Debit Cost of Goods Sold $180; credit Merchandise Inventory $180.
We also practice 2/10, n/30 discount terms, purchase and sales returns, allowances, and freight charges. These details can change the amount paid, received, or recorded as inventory cost.
3. FIFO vs. LIFO: Follow the cost layers
FIFO (First In, First Out) assigns the oldest inventory costs to COGS first. LIFO (Last In, First Out) assigns the newest costs to COGS first. These describe cost assumptions, not necessarily which physical item ships first.
In our perpetual inventory practice, we began with 10 units at $20, purchased 15 at $22, sold 18, purchased another 12 at $25, and then sold 10 more. Each sale must be calculated at the time it occurs.
| Method | Total COGS | Ending inventory |
|---|---|---|
| Perpetual FIFO | $605 | $225 |
| Perpetual LIFO | $640 | $190 |
Inventory check: Total available cost was $830, so COGS plus ending inventory equals $830 under either method. For perpetual LIFO, use the newest available costs at each individual sale.
4. Strategies for managing cash: Look ahead
Good cash management means tracking expected receipts, payments, and the minimum cash a business wants to keep available. A simple cash budget helps us identify a possible shortfall before it becomes a problem.
Cash budget: $2,400 beginning cash + $1,600 expected collections − $2,050 payments = $1,950 expected ending cash .
If our minimum cash target is $2,100, we have a $150 shortfall . Better actions include updating a weekly cash budget, depositing receipts promptly, reconciling accounts, and postponing optional spending when possible.
.png "ACC 111 Exam #2 Nine Accounting Review Topics")
Five additional multiple-choice study areas
Professor Karsten's review also named five multiple-choice categories. They are study areas, not five specific test questions , and the instructor noted that other topics could appear.
- Inventory and COGS: Understand how FIFO and LIFO affect cost of goods sold and ending inventory.
- Financial ratios: Calculate and interpret the ratios taught in the assigned chapters. The review did not specify individual ratios, so chapter assignments and quizzes are essential.
- Credit-card sales: Recognize the entries required for sales and processing fees. For example, a $100 sale deposited net of a $3 fee could involve debit Cash $97, debit Card Fee Expense $3, and credit Sales $100, plus the separate COGS entry where applicable.
- Cash Over and Short: A cash register shortage or overage is recorded using the Cash Over and Short account. If $500 in cash sales produces only $497 cash, the shortage is $3.
- Accounting terminology: Learn key textbook definitions such as NSF check, deposit in transit, outstanding check, sales allowance, cost of goods sold, FIFO, and LIFO.
Our study system: Work, check, practice
We organized the review into a printable binder with practice worksheets and separate answer keys. Rather than only rereading the material, we used three repeatable steps:
- Work: Solve a full problem without looking at the answer key.
- Check: Compare our work, identify the mistake, and try the missed step again.
- Practice: Answer short multiple-choice or true/false questions to reinforce the concept.
The instructor also recommended reviewing homework and quizzes, completing SmartBook work, and using each chapter's Need-To-Know problems, Summary: Tip Sheet , and Multiple Choice Quiz with solutions.
What we learned about proctored-exam readiness
Our Fall 2026 Exam #2 was listed as a 135-minute, 150-point proctored exam , with a deadline of Sunday, October 18, 2026, at 11:59 PM . Those details describe our specific course session, not every ACC 111 exam.
Before a timed attempt, students should confirm they can access the exam, that the required browser and extension work, and that their webcam, power supply, internet connection, and testing space are ready. Our course permitted an embedded calculator and whiteboard , but did not permit outside notes, other websites, or another person's help. The timer could not be paused after selecting Begin.
A major lesson from preparing was to schedule a realistic exam session and leave room for technical issues. Studying matters, but so does making sure the test is actually submitted.
.png "ACC 111 Exam #2 Preparation and Exam-Day Checklist")
Frequently asked questions about ACC 111 Exam #2
What should I study first?
Begin with bank reconciliation, merchandising journal entries, and FIFO/LIFO tables. These require multiple steps, so doing them by hand is useful before reviewing shorter questions.
Are FIFO and LIFO the same as physically selling older or newer products?
No. In accounting, FIFO and LIFO are assumptions for assigning inventory costs to the units sold.
Should I study the problems or use short quizzes?
Both. First complete the multi-step accounting problems; then use short quizzes to test recall, interpretation, and terminology.
Can I use my study binder during the proctored exam?
Not under the instructions given for our Fall 2026 exam. The binder was for studying before testing. Always follow the rules for your own course.
ACC 111 Financial Accounting Study Series
This post is part of our five-exam Fall 2026 ACC 111 series. Review the foundations in Exam #1 before moving into merchandising, inventory, and cash management in Exam #2.
Learning. Applying. Building.
Studying financial accounting has helped us connect classroom topics with the financial decisions involved in running Dee & Dee Brown LLC. From inventory costs to cash planning, the lessons are more meaningful when we apply them to practical business situations. Our approach is to learn the method, practice the steps, and keep building confidence through repetition.
Educational note: These are original practice examples based on an instructor's published review topics, not actual exam questions or an official answer key.