Financial Accounting Chapters 1-3
Financial Accounting Chapters 1-3 acc 203
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This 5 page Bundle was uploaded by Dominique Marinelli on Saturday September 19, 2015. The Bundle belongs to acc 203 at Pace University taught by Reidenbach in Fall 2015. Since its upload, it has received 86 views. For similar materials see Financial Accounting in Accounting at Pace University.
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Better than the professor's notes. I could actually understand what the heck was going on. Will be back for help in this class.
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Date Created: 09/19/15
Chapter 1 A Frame Work for Financial Accounting What is accounting 0 A system of maintaining records of a company s operations and communicating that information to decision makers The language of businessgt form of communication 0 Investors stock and creditors debt use this information Managerial internal users Financial external users 2 functions of Financial Accounting 1 measure business activities of a company 2 communicate those measurements to external parties Partnership and sole proprietorship have unlimited liability Corporation is a company that is legally separate from its owners Key Formulas Assets liabilities stockholder s equity Net income revenues expenses Four Financial Statements 1 Income Statement summarizes revenues and expenses and net income or loss 2 Statement of Retained Earnings Statement of Stockholders Equity how much the company is worth to the investorsowners at a point in time 3 Balance Sheet describes all of the company s economic resources economic debts and stockholders equity at a point in time 4 Statement of Cash Flows changes in cash for a period in time i 3 categories 1 Financing 2 Investing 3 Operating Financing Activities 0 Transactions between the company and investors and creditors 0 Example issuing stock Investing Activities Transactions involving the purchase and sale of resources 0 Example equipment Operating Activities 0 Transactions that relate to the primary operations of the company 0 Example providing products and services to customers 0 Taxes 0 Cost of utilities Retained Earnings profits earned by a company that have not been paid to stockholders 0 Appears on both balance sheet and stockholders equity Stockholder s equity Dividends Beginning balance of retained earnings 0 Net income Chapter 2 The Accounting Cycle During The Period Accounting transactions 0 Internal affects the financial position of a company but does not include an exchange with a separate economic entity 0 Example using supplies on hand 0 External an exchange between the company and a separate economic entity 0 Example purchasing supplies from a vendor A transaction will always affect at least two different accounts Expense cost of conducting business during the period Dividend distribution of cash to stockholders Decrease the balance of retained earnings Stockholder equity accounts 0 Common stock 0 Retained earnings Revenue services performed for customers on account 0 Revenue and expense accounts are shown in the income statement Deferred Revenue cash received from customers for services to be performed in the future UsuaHy Debit expense 0 Credit revenue Cl 1a ter 3 The Accounting Cycle End of the Period CAS H Rare that both cash and the good or service occurs at the same time Adjusting journal entries 1 Prepaid cash moves first 2 Accrual activity comes first Accounts receivable involved in an adjusting entry when revenues are earned but have not been collected or recorded at the end of the period Adjustment process at the end of the accounting period 1 Using the unadjusted trial balance determine the accounts requiring adjustment Record adjusting entries in the journal Post the adjusting journal entries on the Taccounts Prepare an adjusted trial balance to check the equality of the debits and credits UL Cash received in advance of a revenue being earned would be recorded in a liability account such as Unearned Revenue Temporary Accounts Revenues Expenses Dividends Permanent accounts All accounts that appear in the balance sheet 0 Example retained earnings Longterm assets have 3 subcategories 1 Intangible assets 2 Longterm investments 3 Property plant and equipment
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