AC 210 Exam 1 Study Guide
AC 210 Exam 1 Study Guide AC 210
Popular in Intro to Accounting
verified elite notetaker
Popular in Accounting
This 3 page Study Guide was uploaded by Kristen Marie on Thursday May 28, 2015. The Study Guide belongs to AC 210 at University of Alabama - Tuscaloosa taught by Jordan Rippy in Summer 2015. Since its upload, it has received 908 views. For similar materials see Intro to Accounting in Accounting at University of Alabama - Tuscaloosa.
Reviews for AC 210 Exam 1 Study Guide
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: 05/28/15
AC 210 Exam 1 Study Guide Chapter One Organizational Forms Business owned by 1 person Owner is personally liable for all debts of business Business is owned by 2 or more people Each partner is personally liable for all debts of business Business is a separate legal entity Owners shareholders are not personally liable for all debts of the business The Accounting System The system of analyzing recording summarizing and reporting the results of a business s activities Divided into three activities Operating Investing and Financial Two types of accounting reports reports prepared periodically to provide information to external users creditorsinvestors Creditors Banks and Suppliers Investors Stockholders Managerial detailed financial plans and continually updated reports about the operating performance of the company The financial reports of a business is assumed to include the results of only that business s activities Economic resources controlled by the company that have measurable value and are expected to provide future benefits to the company Measurable amounts owed by the business to creditors Owners claim to the business resources Sales of goods or services to customers The cost of doing business necessary to earn revenues Distributions of a company s earnings to its stockholders as a return on their investment Financial Statements Reports the amount of revenue less expenses for a period of time Uses Revenue Expenses Net Income Reports the way the net income and the distribution of dividends affected the financial position of the company during the period Reports the amount of assets liabilities and stockholder s equity of a business at a point in Uses Assets Liabilities Stockholder s Equity Reports the operating investing and financial activities that caused increases and decreases in cash during the period Activities that are directly related to running the business to earn profit Activities that involve buying and selling productive resources with long lives time Any borrowing from banks repaying back loans receiving contributions from stockholders paying dividends Using Financial Statements Creditors 1 Is the company generating enough cash to make payments on its loans Statement of Cash Flows 2 Does the company have enough assets to cover its liabilities Balance Sheet Investors 1 What is the immediate return through dividends on my contributions Statement of Retained Earnings 2 What is the long term return through stock price increases resulting from the company s profits Income Statement Accounting Standards Financial Accounting Standards Board primarily responsible for setting the underlying rules of accounting in the US Generally Accepted Accounting Principles rules of accounting created by FASB for the use in the US Chapter Two The Balance Sheet Assets Resources presently owned by the business that generate future economic benefits Liabilities Amounts presently owed by a business Stockholder s Equity The amount invest and reinvested in a company by its stockholders Financing and Investing Activities Two sources of financing 1 Debt Financing the business obtains through loans 2 Equity Financing the business obtains through owners contribution and reinvestments of profit Study the Accounting Methods A systematic accounting process is used to capture and report the financial effects of a company s transactions 1 ow do the transactions affect the accounting equation which accounts a Every transaction has as least two effects on the basic accounting equation b A L SE Accounting equation must balance A summary of all account names and corresponding account numbers used to record financial results in the accounting system ASSETS LIABILITIES STOCKHOLDERS39 EQUITY l Iquot 1 AWWL 7 Ariat Ai ha 7 LI6M 395 Dp nff39 Arr I 4 l 1 s 1 I 7W39mquotw Auuawa TT Transactions are recorded to general journal Ledger is used to summarize the effects of the journal entries on each account track the running total of all transactions A list of all accounts with ending balance Debits should equal credits balance sheet that shows a subtotal for current assets and current liabilities Assets that will be used up or converted into cash within the next 12 months Resources that will be used for or converted into cash more than 12 months after the balance sheet date Debts and obligations that Will be paid settled or fulfilled Within 12 months of the balance sheet date Debts and obligations that Will be paid settled or fulfilled more than 12 months after the balance sheet date Assessing the Ability to Pay Chapter Three The Income Statement Amounts earned by selling goods and services to customers Costs of business necessary to earn revenue The excess of revenues over expenses Dividing the company s long life into meaningful and shorter chunks of time such as months quarters and years Accrual Basis Accounting Records revenues When they are earned and expenses in the same period as the revenues to which they relate as the revenues of the timing of cash receipts or payments Revenues are recognized When they are earned Record expenses in the same period as the revenues With which they can be reasonably associated The Expanded Accounting Equation Revenues are recorded With credits recording of revenue increases Stockholders Equity Expenses are recorded With debits recording of expenses decreases Stockholders Equity Unadjusted Trial Balance Lists all accounts With normal balance Where the account increases Cash Asset Accounts Payable Liability Net Pro t Margin Indicates how much profit is earned from each dollar of revenue
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'