Accounting 131 test 1 studyguide chapters 1-4
Accounting 131 test 1 studyguide chapters 1-4 131
Popular in Financial Accounting
Popular in Accounting
This 3 page Study Guide was uploaded by Leighton Browne on Sunday February 7, 2016. The Study Guide belongs to 131 at Illinois State University taught by Charles Thomas in Spring 2016. Since its upload, it has received 34 views. For similar materials see Financial Accounting in Accounting at Illinois State University.
Reviews for Accounting 131 test 1 studyguide chapters 1-4
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 02/07/16
Chapter 1 Financial Statements 1. Income Statement(total period of Profitability) revenues & expenses single step OR multistep 2.Statement of Retained Earnings (Profitability) change in balance from 1 period to the next Net Income, Net Loss, Dividens Paid 3.Balance Shee t (snapshot in time) (LiquidiyA = L + SE Assests current expected to be used up in 1 year, cash, inventory longterm: beyond 1 year, real estate, equipment, build material intangible trademark, franchise, patent Liabilities(creditors/sources) Bank: note payable Vendor/supplies: Account payable Employees: Wage Paid Stockholders Equity Common Stock /Contrib Capital Retained Earnings: Rev, Exp, Div Working Capital= current assests current Liab Current Ratio= current assests / current Liab Net Profit Margin= net income / sales revenue (x100 for a %) 4. Statement of Cash Flows investing activities financing activities opportunity activities Annual Report 1. notes to Financial Statement>full disclosure and clarity detail 2.Managment Discussion/Analysis→ the Risks to company 3.Auditors Report→ audit books exam records and F/S. must be independent of company. checks GAAP Chapter 2 Accounting Information System GeneralAcceptedAccountingPrinciples Accounting Rules Designed to disclose buisness performance and inform clients measurements become part of F/S complete the Accnt Cycle FinancialAccountingStandardsBoards Create Basic Objectives of Financial Reporting objectives: provide info useful to investors/creditors to make decisions asses the amount/timing/risk of the buisness cashflows about bbuis assests, claims on assessts, changes through time Characteristics of Accounting Info 1.Primary Qualities Relevance: influence decisons of user predicted value confirmtory value materiality Faithful Representation completeness free of error neutral info/ unbias 2.Secondary/Enhancing Qualities Comparibility: info measured in a similar manner by diff. companies thats considered imparable Consistency: achieved when same accnt rules are applied to same items through time Verifiability: agreement of the acitivity between parties Timliness Understandability: Assumptions Economic Entity company is acccounted for sepeart from owners own transactions Continuity Going concern of lasting long enough to fulfill going commitments Time Period divided into time periods to make assumptoins Monetary Unit financial results reported in monetary units, so excludes customary satisfac etc. Principles Historical Cost Principle faithful representation of value when it was purchased Revenue Recognition Principle when to record revenue, in the time period or relevative guarentee Expense Recognitoin(matching) only recorded with what revenue it helped produce ^^^ Conservatism take care in overstating understating General Ledger each account has own pages to track balance and activity 1. Assests, LIab, SE, Rev, Exp IN THAT ORDER Double Entry System when you record a cash sale, you also record a Revenue sale. 1. 1 or more accnts Dr/Cr 2. total $ must equal Dr=Cr Assests Cash/ Investments/ Accnt Recieveable/inventory/land/building/equip/patent/copyright Liabilities Accnt payable/salaries/unearend sales rev/ intrest pay/ income tax/ notes/ bonds SE Common Stock Retained Earn Revenue sales revenue, intrest income, rent revenue Expense CofGS, salaries expense, rent E, Insure E, Depreciat E, Ad E, Utilites Ex, Repairs, Property Tax Debit Credit Expenses Revenue Assets Liab Dividens Stockholder Equity Chapter 3 Accrual Basis of Accounting→ GAAP accepted revenue is recognized as it is earned and expenses recognized when they are incurred. cash and non cash transactions, superior becasue focuses on selling TimePeriod Assumption: divides into specific periods, month a quarter or a year Revenue Recognition Principle: revenue earned, collelction of cash reasonably assured Matching Expense Principle: record expenses of that period of which ONLY helped generate the rev CashBasis of Accounting→ revenue is recorded when cash is recieved, regardless of when it is earned expenses is recorded when cash is paid, rather than when it is inccured Adjusting Journal Entries 1. Deferral/Prepayment buisness recieves cash, but doesnt recognize the revenue right away because rev hasnt been EARNED YET, unearned starts as liability and moves to revenue 2. The buisness pays cash, but doesnt recognize the expense right away becasue the expense has not been used up yet prepaid items, Longterm Assests, Supplies> start as Assests move to Expenses as used\
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'