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FSU - ACG 2021 - ACG2021 Exam - Study Guide

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FSU - ACG 2021 - ACG2021 Exam - Study Guide

School: Florida State University
Department: Accounting
Course: Financial Accounting
Professor: Ronald Pierno
Term: Summer 2015
Tags: Accounting and ACG2021
Name: ACG2021 Exam
Description: Study guide of chapters 1-3
Uploaded: 01/21/2018
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background image ACG 2021 Exam 1 Study Guide Chapter 1 Three forms of business organization: 1. Sole Proprietorship – business owned by one person 2. Partnership – owned by two or more people associated as partners
3. Corporation – organized as a legal entity owned by stockholders
Internal Users: managers, supervisors, directors, officers; need comparisons and projections External Users: investors, creditors, labor unions, taxing authorities, regulatory agencies
Sarbanes­Oxley Act (SOX): regulations passed to reduce unethical corporate behavior
Business Activities (kept track of by the accounting information system) ­ Financing activities o Borrowing money (creates liabilities, notes and bonds payable) o Issuing shares of stock for cash (dividends and common stock) ­ Investing activities (purchasing resources) o Property, plant, and equipment o Assets (cash!) o Investments ­ Operating activities o Revenue (increase in assets/ decrease in liabilities from selling goods/services) o Inventory (goods for sale to customers) o Receivables (right to receive $ from another party) o Expenses (assets consumed/services used in generating revenue) o Net income/ loss (revenue or expenses exceeding expenses or revenue) Income Statement: revenue­expenses=net income ­ Specific period of time, helps make predictions Retained Earnings statement: beg. equity+ owner contributions +net income –dividends = ending equity ­ Net income retained, same period as income statement Balance Sheet: liability + equity = assets  (Basic Accounting Equation) ­ Stockholders’ equity = owners’ claim to assets  Statement of Cash Flows: cash inflow­ cash outflow = net cash flow
Annual Report: always includes financial statements, management discussions, analysis, notes, 
auditor’s report
background image Chapter 2 Classified balance sheet (groups together similar assets and liabilities), snapshot at point in time ­ Current assets (will be converted to cash) o Operating cycle (avg. time required to buy inventory, sell it, collect cash) o Common types: cash, investments, receivables, inventories, prepaid inventories o Listed in order of liquidity ­ Long­ term investments: (investments in stocks/bonds, long term assets/notes receivable) ­ Property, plant, & equipment: (land, buildings, vehicles, furniture) o Accumulated depreciation (total depreciation of assets) ­ Intangible assets (no physical substance aka goodwill, patents, copyrights, trademarks) ­ Current liabilities (obligations: wages, notes/interest/taxes payable)
­ Long­term liabilities (bonds/mortgages/long term notes payable, lease/ pension liabilities)
­ Stockholders’ equity = retained earnings + common stock Ratios Types: ­ Profitability Ratio: measures operating success for a given time
­ Earnings per share: (net income – preferred dividends)/ average # of outstanding shares
­ Current ratio: (current assets/ current liabilities) measure of liquidity
­ Liquidity ratio: measure short term ability to pay obligations and unexpected needs
­ Solvency ratio: measure of a company’s ability to survive over a long period
­ Debt to assets ratio: (total liabilities/total assets)
Free cash flow = Cash provided by operations – capital expenditures – cash dividends Generally accepted accounting principles: accounting standards with authoritative support
Securities & exchange commission: gov. agency that oversees markets
Financial accounting standards board: accounting standard­ setting body (in USA)
Public company accounting oversight board: determine auditing standards/ review firms
Useful information: relevance, faithful representation, materiality
Enhancing qualities: comparability, verifiable, understandability, consistency, timely
Chapter 3 Event 1: Investment of cash by stockholders (increases cash in assets and increases common stock for stockholders’ equity) Event 2: note issues in exchange for cash (increases cash in assets and increases notes payable for liabilities) Event 3: purchase of office equipment for cash (increases equipment in assets and decreases cash for assets)

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School: Florida State University
Department: Accounting
Course: Financial Accounting
Professor: Ronald Pierno
Term: Summer 2015
Tags: Accounting and ACG2021
Name: ACG2021 Exam
Description: Study guide of chapters 1-3
Uploaded: 01/21/2018
3 Pages 45 Views 36 Unlocks
  • Better Grades Guarantee
  • 24/7 Homework help
  • Notes, Study Guides, Flashcards + More!
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