Chapter 2 Notes
Chapter 2 Notes ACTG 211
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This 2 page Bundle was uploaded by Lauren Zurcher on Tuesday November 10, 2015. The Bundle belongs to ACTG 211 at University of Oregon taught by Michael Tomcal in Fall. Since its upload, it has received 50 views. For similar materials see Into to Financial Accounting in Accounting at University of Oregon.
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Date Created: 11/10/15
CHAPTER 2 Parts of the balance sheet 0 Cash investments receivables inventories prepaid expenses 0 Stockbond investments assets not currently used long term notes receivable 0 Currently being used subtracted accumulated depreciation 0 Don t have physical substance goodwill patent copyrights trademarktrade names 0 Accounts Payable salarieswages payable notes payable interest payable income taxes payable 0 bonds payable mortgage payable long term notes payable lease liabilities pension liabilities 0 Common stock retained earnings Ratios and what they mean Current Ratio Current AssetsCurrent liabilities 0 Higher ratio means favorable liquidity Debt Ratio Total liabilitiestotal assets 0 Lower value means favorable solvency Free Cash Flow Net cash provided by operating act capital expenditures cash dividends o Bigger number more potential to finance new investments and pay more dividends Profit Margin Net income I Net Sales 0 Profitability using assets to produce profits PricetoEarnings Price per Share I Earnings per Share 0 Positive market expectations through stock market Accounting Process Analyze each transaction source documents Record the relevant ones in a journal Postjournal info to ledger accounts Prepare and Analyze trial balance gt Listing of accounts in order Source Documents Describe transactions Examples checks bank statements purchase orders etc Account increases decreases in a specific asset equity or liability Ledger record containing all accounts used 0 General Ledger holds all the ledgers ASSETS resources owned controlled by company 0 what money they have what others owe you from credit sales IOU by paper assets that represent future payments 0 Ex prepaid insurance rent services etc assets until used once used turned to expense assets until used through depreciation stores offices warehouses etc what the buildings are built on LIABILITIES What the company owes 0 Accounts Payable promises to pay later 0 Note Payable promise to pay later 0 Unearned Revenue Accounts settled in the future when products are delivered 0 Ex customers who pay in advance 0 Accrued liabilities amounts owed and not yet paid 0 Ex 2 days worth of pay for employees when pay period ends EQUITY Owner s claim to the assets earned o An investment in a company by an owner Asset distributions to stockholders owners Sales commission rent revenue interest revenue Advertising supplies rent utilities etc How to Analyze Transactions 0 Ledger collection of accounts for an information system 0 Chart of accounts list of all the ledgers includes identifying number for each account shonhanded
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