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FSU - ACG 2021 - ACG Week 1 Notes - Class Notes

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FSU - ACG 2021 - ACG Week 1 Notes - Class Notes

School: Florida State University
Department: Accounting
Course: Financial Accounting
Professor: Ronald Pierno
Term: Summer 2015
Tags: Accounting, paterson, notes, and financial
Name: ACG Week 1 Notes
Description: These cover some of chapter 1
Uploaded: 01/14/2018
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background image ACG2021 Read the chapter, please do it. The book will answer everything for you, the notes aren’t 
enough. Don’t fly buy with “yeah it looks familiar”. Read before, quiz yourself? Can you
write it down? Chapter 1: Introduction to Financial Statements Learning objectives:  o Describe the primary forms of business organization.  o Identify the users and uses of accounting information  o Explain the three principal types of business activity.  o Describe the content and purpose of each of the financial statements.  o Explain the meaning of assets, liabilities, and stockholders’ equity, and state the  basic accounting equation.  o Describe the components that supplement the financial statements in an annual  report.  Forms of Business Organization o Sole Proprietorship:  Simple to establish Owner controlled Tax advantages o Partnership Simple to establish Shared control  Broader skills and resources Tax advantages o Corporations Easier to transfer ownership Easier to raise funds No personal liability A corporation is an incorporated business entity that has filed articles of incorporation in 
a state of domicile. 
o Advantages of a Corporation: Can attract large amounts of capital investment  Allows for an easy transfer of ownership Can attract professional management Provides stockholders with limited liability Survives the death of its 
owner(s) (continuity of life) 
o Disadvantages of a Corporation:  Corporations are subject to more government regulations  Shareholders can have difficulty knowing whether management is making 
decisions in shareholders’ best interests 
Week 
background image Corporations are subject to income taxation (Double taxation)
 
Definition of Accounting  o Accounting is the information system that identifies, records, and communicates  the economic events of an organization to interested users. o An economic event that doesn’t get recorded is pocketed money.  o Conveys the information of the company, to everyone.  o Users can be divided in two groups:  Internal users: people inside the company, anyone employed by that 
company.
External users: people outside the company, a bank would be considered 
external.
o The purpose of accounting, and in particular financial accounting, is to provide  economic information as inputs for decision making by users of the information.  o Users and Uses of Financial Information Internal Users: 
­ Marketing 
­ Management
­ Finance
­ Human Resources
External Users:
­ Banks
­ Share/stock holders
­ Creditors 
­ Investors o Ethics in Financial Reporting: United States regulators and lawmakers were very concerned that the 
economy would suffer if investors lost confidence in corporate accounting 
because of unethical financial reporting. 
Fraud/Financial Scandals
­ Enron: energy company that overpriced and would hide information 
because the accountants suck. Arthur Anderson was the worst. Effective financial reporting depends on sound ethical behavior.  Congress passed  Sarbanes­Oxley Act of 2002.  o The Sarbanes­Oxley Act resulted in:  1. Top management must now certify the accuracy of financial information.  2. Penalties for fraudulent activity was increased. 
3. Independence of auditors was increased. 
4. Increased oversight by the board of directors must occur, including the  board’s selection and supervision of the independent auditor.  ­ they now have to rotate teams every 7 or so years. Business Activities o Three types of cash flow activity: Financing Investing 2

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School: Florida State University
Department: Accounting
Course: Financial Accounting
Professor: Ronald Pierno
Term: Summer 2015
Tags: Accounting, paterson, notes, and financial
Name: ACG Week 1 Notes
Description: These cover some of chapter 1
Uploaded: 01/14/2018
3 Pages 27 Views 21 Unlocks
  • Better Grades Guarantee
  • 24/7 Homework help
  • Notes, Study Guides, Flashcards + More!
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