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FSU - ACG 2021 - Fin. Acct. Notes - Week 2 - Class Notes

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FSU - ACG 2021 - Fin. Acct. Notes - Week 2 - Class Notes

School: Florida State University
Department: Accounting
Course: Financial Accounting
Professor: Ronald Pierno
Term: Summer 2015
Tags: financial accounting
Name: Fin. Acct. Notes - Week 2
Description: These notes cover all of Chapter 2.
Uploaded: 01/22/2018
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background image Tabana 1 ACG 2021 – Chapter 2: A Further Look at Financial Statements 1. Identify the sections of a classified balance sheet. a. Presents a “snapshot” at a point in time.
b. To improve understanding, companies group similar assets and similar 
liabilities together. a. Assets: i. Current assets 1. Assets that a company expects you to convert to cash  or use up within one year or the operating cycle
whichever is longer.
a. Operating cycle is the average time it takes  from the purchase of inventory, sell it to 
customers, and collect the cash from customers.
b. Unless noted, we will assume that the  companies’ operating cycles are shorter than 
one year.
c. Common types of current assets are:  i. Cash ii. Investments iii. Receivables iv. Inventories v. Prepaid expenses d. Companies list current asset accounts in the  order of their liquidity which is the order in 
which they expect to convert them into cash.
ii. Long term investments (or just “Investments”) 1. Investments in stocks and bonds of other corporations  that are held for more than one year. 2. Long-term assets such as land or buildings that a  company is not currently using in its operating 
activities.
3. Long-term notes receivable iii. Property, plant, and equipment (PP&E) 1. Long useful lives
2. Currently used in operations
3. Examples include land, building, equipment, delivery 
vehicles, and furniture…that are used in operations. 4. Depreciation: allocating the cost of assets to a  number of years 5. Accumulated depreciation: total amount of  depreciation expensed thus far in the asset’s life iv. Intangible assets 1. Assets that do not have physical substance. a. Includes goodwill, patents, copyrights, and  trademarks or trade names.
background image Tabana 2 b. Helpful Hint: sometimes intangible assets are  reported under a broader heading called “Other 
assets.”
b. Liabilities and Stockholders’ Equity i. Current liabilities 1. Obligations the company is to pay within the next year or operating cycle, whichever is longer. 2. Common examples are accounts payable, salaries and  wages payable, notes payable, interest payable, and 
income taxes payable. 
3. Also included as current liabilities are current  maturities of long-term obligations—payments to be 
made within the next year on long-term obligations.
ii. Long-term liabilities 1. Obligations a company expects to pay after one year.
2. Include bonds payable, mortgages payable, long-term 
notes payable, lease liabilities, and pension liabilities. iii. Stockholders’ equity 1. Common stock - investments of assets into the  business by the stockholders. 2. Retained earnings - income retained for use in the  business 2. Identify tools for analyzing financial statements and ratios for  computing a company’s profitability.  a. Ratio Analysis a. expresses the relationship among selected items of financial  statement data b. A ratio expresses the mathematical relationship between one  quantity and another.  c. A single ratio by itself is not very meaningful.
d. Ratios can be used for intracompany comparisons covering two or 
more years of the same company, intercompany comparisons 
between different companies, and comparisons to industry 
averages.

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School: Florida State University
Department: Accounting
Course: Financial Accounting
Professor: Ronald Pierno
Term: Summer 2015
Tags: financial accounting
Name: Fin. Acct. Notes - Week 2
Description: These notes cover all of Chapter 2.
Uploaded: 01/22/2018
6 Pages 28 Views 22 Unlocks
  • Better Grades Guarantee
  • 24/7 Homework help
  • Notes, Study Guides, Flashcards + More!
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