New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Accounting 211: Week 1 Notes

by: Alicia Polcha

Accounting 211: Week 1 Notes 211

Marketplace > Business > 211 > Accounting 211 Week 1 Notes
Alicia Polcha
Penn State
GPA 4.0
View Full Document for 0 Karma

View Full Document


Unlock These Notes for FREE

Enter your email below and we will instantly email you these Notes for Principles of Accounting 211

(Limited time offer)

Unlock Notes

Already have a StudySoup account? Login here

Unlock FREE Class Notes

Enter your email below to receive Principles of Accounting 211 notes

Everyone needs better class notes. Enter your email and we will send you notes for this class for free.

Unlock FREE notes

About this Document

These are the first week of notes, mostly covering the basics of accounting and some theory. The exam is still several weeks away.
Principles of Accounting 211
Prof. Herrick
Class Notes
Accounting, business, Math, income statements, finance




Popular in Principles of Accounting 211

Popular in Business

This 3 page Class Notes was uploaded by Alicia Polcha on Friday January 15, 2016. The Class Notes belongs to 211 at a university taught by Prof. Herrick in Spring 2016. Since its upload, it has received 15 views.

Similar to 211 at University


Reviews for Accounting 211: Week 1 Notes


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 01/15/16
Chapter One – Accounting in Action 1) Accounting – identify, record and communicate the economic events of an organization  a) Three Activities: i) Identification – select economic events (transactions) ii) Recording – classifying and summarizing  iii) Communication – preparation of accounting events b) Internal Users – inside the company i) Management, human resources, finance, marketing c) External – outside of the company i) Investors. IRS, labor unions, creditors, customers, SEC (Securities in Exchange Commission) 2) The building blocks of accounting a) Ethics in Financial Reporting – standards of conduct by which one’s actions are judged as right or wrong, honest or dishonest, fair or not fair, are Ethics i) Recent financial scandals: Enron, WorldCom, HealthSouth, AIG ii) Effective financial reporting depends on sound ethical behavior  b) Steps to Analyzing Ethics Cases and Situations (1) Recognize an ethical situation and the ethical issues involved (2) Identify and analyze the principal elements in the situation  (3) Identify the alternatives, and weigh the impact of each alternative on various stockholders c) The accounting profession has attempted to develop a set of standards that are generally accepted  and universally practiced – Generally Accepted Accounting Principles (GAAP) d) Financial Statements  i) Balance Sheet ii) Income Statement iii) Statement of Owner’s Equity  iv) Statement of Cash Flows v) Note Disclosure – add details to financial statements to clarify uncertainties  e) Generally Accepted Accounting Principles (GAAP) – a set of rules and practices, having  substantial authoritative support, that the accounting profession recognizes as a general guide for  financial purposes  i) Standard­setting bodies determine these guidelines: (1) SEC, FASB, IASB f) Historical Cost Principle – companies record assets at their cost: (a) Reported at cost when purchased and also over the time the asset is held, cost easily  verified (whereas market value is often subjective), market value information may be  more useful depending on the circumstances  g) Fair Value Principle – states that assets and liabilities should be reported at fair value (the price  received to sell an asset or settle a liability) transaction data that can be expressed in terms of  money h) Assumptions i) Economic Entity Assumption – requires that activities of the entity be kept separate and  distinct from the other  ii) Monetary Unit Assumption – include in the accounting records only 3) Forms of Business Ownership a) Proprietorship i) One owner ii) Owner often manages/operates iii) Owner receives any profit, suffers any losses and is personally liable for all debts b) Partnership i) Owned by two or more persons  ii) often retail and service­type businesses iii) generally unlimited personal liability iv) partnership agreement  c) Corporation  i) Ownership divided into shares of stock  ii) separate legal entity organized under state corporation law  iii) limited liability iv) required to pay income tax (negativity of corporation) 4) The basic accounting equation – provides the underlying framework for recording and summarizing  economic events  a) Liabilities + Owner’s Equity = Assets i) Assets  (1) resources a business owns  (2) Provide future services or benefits  (3) Ex. Cash, supplies, equipment, etc ii) Liabilities  (1) Claims against assets (debts and obligations) (2) creditors – party to whom money is owed (3) Ex. Accounts “payable” ­ informal (4) Notes payable – formal agreement to repay money, signature, interest iii) Owner’s Equity  (1) ownership claim on total assets (2) referred to as residual equity (3) investments by owners (capital) and revenues (+)  (a) Increases owner’s equity (4) Drawings and expenses decrease equity 5) Expanded Accounting Equation a) Assets = Liabilities + Owner’s Capital – Owner’s Capital + Revenues – Expenses b) Increases in Owner’s Equity i) Investments by owner – assets the owner puts into the business ii) Revenues – earns business income c) Common sources of revenue i) Sales ii) Fees iii) Services iv) Commissions v) Interest vi) Dividends vii) Royalites viii) Rent d) Decreases in Owner’s Equity i) Drawings­ Owner withdraws cash or other assets for personal use ii) Expenses­ costs of assets consumed or services used in process of earning revenue (1) Include: salary expenses, rent expenses, utilities expense, tax expenses, ect. 6) Using the BAE a) Transaction Analysis  b) Summary of Transactions 7) Financial Statements  a) Income Statement – Revenues & Expenses  i) Reports the revenues and expenses for a specific period of time (“For the month ended”) ii) Net Income – revenues exceed expenses (aka Profit) iii) Net Loss – expenses exceed revenues (Negative Net Income) (1) Top of every column should include dollar sign as well as net income/loss  (2)    Net income is double underlined b) Owner’s Equity Statement  i) Owner’s Capital & Drawings & Revenue & Expenses ii) Includes all calculations from income statement iii) Statement indicated the reasons why owner’s equity has increased or decreased during the  period iv) Beginning number of every statement is the previous balance of previous statements (1) Adds investments and net income (from income statement) (2) Subtracts drawings form investment and net income c) Balance Sheet Includes: i) Assets (1) Cash (2) Accounts receivable (3) Supplies (4) Equipment (a) Total assets ii)  Liabilities (1) Accoutns Payable d) Owner’s Equity i) Capital (1) Total liabilities and owner’s equity ii) Arranged in liquidity – what will turn into cash e) Statement of Cash Flow – everything that happened in the cash account


Buy Material

Are you sure you want to buy this material for

0 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Jennifer McGill UCSF Med School

"Selling my MCAT study guides and notes has been a great source of side revenue while I'm in school. Some months I'm making over $500! Plus, it makes me happy knowing that I'm helping future med students with their MCAT."

Bentley McCaw University of Florida

"I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"


"Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.