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FSU - ACG 2021 - Study Guide - Midterm

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FSU - ACG 2021 - Study Guide - Midterm

School: Florida State University
Department: Accounting
Course: Financial Accounting
Professor: Ronald Pierno
Term: Summer 2015
Tags: financial accounting
Name: ACG 2021 Exam 1: Chapters 1-3
Description: Exam 1 study guide for chapters 1-3 Professor Jeff Paterson
Uploaded: 09/17/2017
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background image ACG 2021 Chapter 1 Types of Business Organization Sole proprietorship Partnership Corporation 1 owner 2 or more partners as owners No personal liability Tax advantage Tax advantage *(Shareholders=limited)  liability) Simple to establish Simple to establish Easy to raise funds Broader skills and resources Easy to transfer ownership Professional management Cons: double taxation, more  government regulation & 
shareholders not knowing if 
management is decisions in 
their best interest
Accounting: Information system that identifies, records; communicates the economic events of an 
organization to interested users. (For decision making)
External users: outsiders of the company Investors, creditors, customers, labor unions etc.  Internal users: managers of the company who plan, run & organize the business Marketing managers, production supervisors, finance directors, company officers, etc. Sarbanes­Oxley Act (SOX): Top management must certify the accuracy of financial information Results  penalties for fraud  independence of auditors  oversight by the board of directors Business Activities 1. Financing:  a. Borrowing money (Liabilities)
b. Issuing (selling) shares of stock for cash (Common stock: amount paid by stockholders)
c. Dividends: payments to stockholders 2. Investing: a. Purchases of resources a company needs to operate (Assets purchased/owned)
b. Investing to outsiders
3. Operating Activities:  a. Affected by daily operations
background image b. Revenue, inventory, accounts receivables, expenses, liabilities, net income/loss Financial Statements 1. Income Statement: Shows how successfully the business performed for a specific time period a. Revenue  –  Expenses  Net Income(Loss) 2. Retained Earnings Statement: Shows how much is retained in the business for future growth a. Beginning Retained Earnings (from previous year) (+)  Net Income or  (­)  Net Loss (­)  Dividends (=)  Retained Earnings b. Commonly replaced by Statement of Stockholders’ Equity due to it showing Retained  Earnings and Common Stock  3. Balance Sheet: Shows what the business owns (Assets) and owes (Liabilities) at a specific point  in time a. Assets  =  Liabilities  +  Stockholders’ Equity                                         Common Stock + Retained Earnings                                     Beginning Retained +/(­)Net Income (Loss) – Dividends = Retained Earnings 4. Statement of Cash Flow: Shows cash receipts and cash payments of a business for a specific  period  a. Cash effects of a company’s Operating, Investing and Financing activities Annual Report: Companies must provide report to shareholders Includes Financial Statements and brief explanations Brief explanations: 1. Management Discussion and Analysis (MD&A): Ability to pay near­term obligations, fund  operations/expansion, and its results of operations 2. Notes to the Financial Statements: clarify financial statements and provide additional  qualitative and quantitative detail 3. Auditor’s Report: Prepared by an outside auditor. Auditor’s opinion to the fairness of the  presentation of the financial and results of operation and conformance with GAAP a. Unqualified Opinion: Financial statements are free of error and presented fairly b. Qualified Opinion: Limitation of scope and violation of GAAP
c. Disclaimers: Believe that financial statements are not fairly stated
d. Adverse Opinion: The financial statements are misstated/misleading that they don’t  represent the company or comply with GAAP Generally Accepted Accounting Principles (GAAP): Accounting standards that guide accounting  professionals and have authoritative support.
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School: Florida State University
Department: Accounting
Course: Financial Accounting
Professor: Ronald Pierno
Term: Summer 2015
Tags: financial accounting
Name: ACG 2021 Exam 1: Chapters 1-3
Description: Exam 1 study guide for chapters 1-3 Professor Jeff Paterson
Uploaded: 09/17/2017
12 Pages 52 Views 41 Unlocks
  • Better Grades Guarantee
  • 24/7 Homework help
  • Notes, Study Guides, Flashcards + More!
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