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FSU - ACG 2021 - Chapter 2 Notes - Class Notes

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FSU - ACG 2021 - Chapter 2 Notes - Class Notes

School: Florida State University
Department: Accounting
Course: Financial Accounting
Professor: Ronald Pierno
Term: Summer 2015
Tags: Accounting and ACG2021
Name: Chapter 2 Notes
Description: Textbook and lecture notes
Uploaded: 01/30/2018
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School: Florida State University
Department: Accounting
Course: Financial Accounting
Professor: Ronald Pierno
Term: Summer 2015
Tags: Accounting and ACG2021
Name: Chapter 2 Notes
Description: Textbook and lecture notes
Uploaded: 01/30/2018
4 Pages 20 Views 16 Unlocks
  • Better Grades Guarantee
  • 24/7 Homework help
  • Notes, Study Guides, Flashcards + More!

Unformatted text preview: -Iong term liabilites: Obligations a company expects to Pay after one year. bonds payable , mortages payable, long term noks payable tlase liabilities, pension liabilities - Stockholders eqvity - mon Stock investments of assets by Stockholders 2. ntained earningss Income retained for business use Using financial Statements - ratio analysis : technique that expresses the relationship among Selected items of financial Statement data - ratio : mathematical relationship between revenue 2 qvantities - expenses -one ratio by Htself is not very meaningful = net income - used for comparing two companies within company, or to industry averages - Intracompany - 2 years for same company - Industry - average : based on average ratios - Intercompanys comparison between com Rehtors - Using the income Statement - profitability ratios measures the operating success or a company for a given time - earnings per share : (EPS) measure of net income earned on each common Stock Share, net income - preferred dividends avg #. Common Shares outstanding during year using the statement of stockholders equini presents cavses of change to storicholders equity, including thoi that cavsed retained earnings to change Nos affected by common stock dvidends, & het IncomeQualities of USEPI Informahon . -- USEFUL INFO = revelant & faithful representation - relevana: quality that indicates that the Info helps make a diuision ' faithful representation : compleke, neutral, no error materiality :if an item will influence a creditor / investor - enhancing qualities : Com Parability: dif. com panies use Same auchg. principals Verifiable : get similar results by independent Obstve cs v Sing same methods :understandability: Clear & concise, comprehendable consis Hency same methods from year to Year . timely available while still relevant - assumptions in Financial reporting: Monetary unit assum prin reavires only things cxpressed in money are included in Ocaunting records economic, entity assumption : that every economic entity can be identified & accounted for periodicity assumption life of a business can be divided into artificial time periods going concern ascumption : company will tontinue to operate No In the forseeable future -measurement principles : historical cost prind poll companies shoula Record assets at their COSE fair valve principal : assets & liabilities should be reporud at fair value (price to suit f ull disclosure principal : requires com panies + disclose all Circumstances levent that matter to financial Statement user Cost constimt : constraint that weighs he cast Hat com will incur provide the info against the benefit financial state users gain from having inpo available- using a classified balance Sheet * liquidity : Ability to pay obligations expecked to be co me dve within next year or operating cycle . Working capital: dreceraecos BRA = Current assets - current liabilities liquidity ratos : measure short-term ability to pay maturing Obligations & meet unexpected needs for cash Current ratio : measure of liquidity : Current assets current liabilities Solvency: ability to pay interest as it comes due to repay the balance of a debt. dve at its maturity eso Wency ratio : measure of ability of a company to Survive over a long period of time debt to assets ratio: Total liabilities total assets Free cash_ Cash provided capital cash flow by Operations, expenditures dividends . rm the statement of cash (Lows, cash prdvided by operating activities doesnt account for maintaining dividends and investing in new (PB, &E), omni bilo . the Standard - Setting environment .generally accepted accounting principles (GAAP) : accounting Standards w/ authoritative Support, guide cacto. professionals :securities & exchange commission (SEC) : agency of GOV That oversues financial maruts & acctg. standard-seming bodies financial accounting Standards: board.(FASB): accounting standard - Seting body in US .international accounting standards board (TASB) : Issues Standards adopted by places Outside VS public company accounting Oversight board (PCAOBS: grovp to determire additing standards/n review auditing Firms

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