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Financial Accounting Week 1

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by: Teena Pandey

Financial Accounting Week 1 BUSACC 0030

Marketplace > University of Pittsburgh > Business > BUSACC 0030 > Financial Accounting Week 1
Teena Pandey

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About this Document

These are the in-class notes and practice problems.
Dr. Boyas
Class Notes
Accounting, financial, In Class
25 ?




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1 review
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"Clutch. So clutch. Thank you sooo much Teena!!! Thanks so much for your help! Needed it bad lol"
Ms. Ceasar Zboncak


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This 4 page Class Notes was uploaded by Teena Pandey on Tuesday January 26, 2016. The Class Notes belongs to BUSACC 0030 at University of Pittsburgh taught by Dr. Boyas in Summer 2015. Since its upload, it has received 20 views. For similar materials see FINANCIAL ACCOUNTING in Business at University of Pittsburgh.


Reviews for Financial Accounting Week 1

Star Star Star Star Star

Clutch. So clutch. Thank you sooo much Teena!!! Thanks so much for your help! Needed it bad lol

-Ms. Ceasar Zboncak


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Date Created: 01/26/16
Chapter 1 Monday, January 11, 2016 Forms of Organizations  Sole Proprietorship o Liability: personal  Partnership o "Agreement" o When a partner dies or quits, partnership is null and void. Continuity gets disrupted with departure of a partner o Join and several liability. Worse than sole proprietorship. You are jointly liable in a lawsuit  Corporation o Limited liability for owners (stockholders) o Advantages:  Most you can lose is your own investment. Most protected  Continuity  Ease in transferring ownership  Raise large $$ o Disadvantages:  More taxes paid  Agency costs  Reduce agency costs by giving them some shares in the company, etc.  Tie their compensation to the stock price ***  Elect competent Board of Directors and Audit Committee o Public Corporation (publically stated stock) Accounting: A system that collects and processes financial information about an organization and reports that information to decision makers. "Language of Business" Four Basic Financial Statements  Income Statement o REVENUE - EXPENSES = NET INCOME o For a period of time.  Statement of Retained Earnings o Owners invested in a company through earnings. Money that the owners have earned that they have chosen to reinvest in the company.  Balance Sheet o Point in time o Assets: future economic resource. Something that will benefit the business in the future o Liability: future economic sacrifices caused by a past transaction o Stockholders' Equity: Retained earnings + Contributed capital  Contributed Capital: $$$ owners put into the company when they bought the stock  Common Stock (par value per share x # of shares common sh)  Additional Paid in Capital (excess over par) o ASSETS = LIABILITIES + STOCKHODERS' EQUITY  Statement of Cash Flows o Operating o Investing o Financing  SALES - COST OF GOODS SOLD = GROSS PROFIT Exercise 1-2 Accounts Receivable Asset Cash and cash Equivalents Asset Net Sales Revenue Notes Payable Liabilities Taxes Payable Liabilities Retained Earnings Stockholders' Equity Cost of Products Sold Expense Marketing, Administrative, and Other Expense Expenses Income Taxes Expense Accounts Payable Liabilities Land Asset Property, Plant, and Equipment Asset Long-Term Debt Liabilities Inventories Asset Interest Expense Expense Exercise 1-10 Indepenent Total Total Net Income Total Total SE Cases Revenues Expenses (Loss) Assets Liabilities A 242,300 196,700 45,600 253,500 75,000 178,50 0 B 206,420 176,500 29,920 590,000 239,400 350,60 0 C 73,500 91,890 (18,390) 260,400 190,760 69,640 D 35,840 9,840 190,430 97,525 E 224,130 209,500 173,850 360,10 0 Problem AP 1-3 Transactions Net Income Cash Services performed for customers for $85,000 of which $15,000 is +$85,000 + uncollected. $70,000 Cash borrowed from local bank, $25,000. Signed one year note. NA + $25,000 Small service truck purchased at the end of the period to be used iNA -$8000 business for 2 years, starting next quarter. $8000 cash. Wages earned by employees $36,000. 1/6th is unpaid at the end of the -$36,000 - period. $30,000 Other operating expenses, $31,000. 1/2 unpaid at the end of the -$31,000 - period. $15,500 Service supplies purchased for use in business. Spent $4000 cash of-$3000 -$4000 which $1000 were unused at the end of the period. Statement of Retained Earnings  Second financial statement prepared  Beginning Retained Earnings + Net Income (or - Net Loss) - Dividends = Ending Retained Earnings <-- Goes on Balance sheet Statement of Cash Flows  Operating o Everything else.  Investing o - purchase long term/short term assets/investments o + sale long term/short term assets/investments  Financing o + sale/issuance of own stock/debt o - buy back own stock/repay debt o - dividends paid on own stock (amount paid to owners) Exercise 1-13 Purchase of Property, plant, and equipment I- Cash Received from customers O+ Cash paid for dividends to stockholders F- Cash paid to suppliers O- Income taxes paid O- Cash paid to employees O- Cash proceeds received from sale of investment in I+ another company Repayment of borrowings F- Figure 1.6 page 16f


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