Notes from January 25th and 27th
Notes from January 25th and 27th ACCT 2110 - 002
Popular in Principles of Financial Accounting
ACCT 2110 - 002
verified elite notetaker
Popular in Accounting
This 5 page Class Notes was uploaded by Callisa Ruschmeyer on Wednesday January 27, 2016. The Class Notes belongs to ACCT 2110 - 002 at Auburn University taught by Elizabeth G Miller in Fall 2015. Since its upload, it has received 33 views. For similar materials see Principles of Financial Accounting in Accounting at Auburn University.
Reviews for Notes from January 25th and 27th
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: 01/27/16
th th January 25 and 27 Chapter 1 Homework Help Items in the Annual Report and Professional Ethics All four financial statements make up annual reports Notes to the financial statements (footnotes)- clarify information in statements o The info can be numerical or qualitative Management's discussion and analysis- management's explanation to expand on favorable and unfavorable trends o Also expand on any risks that the company may be facing (or soon to face) Audit report- here is where the auditor's opinion is given o Best opinion- "unqualified" (basically everything looks good) o Okay opinion- "everything looks good except for _______" o Worst opinion- no opinion is given Essentially this tells investors that the company has many issues and should steer clear of it Professional Ethics Validity of financial statements comes from professional ethics Ethics ensures that managers can trust their employees; investing public must trust accountants and ensure all formal codes are followed Chapter 1 Homework Help Income from operations = gross margin – operating expenses Gross margin = net sales – cost of goods sold Retained Earnings on 12/31/2015 = Retained Earnings on 1/1/2015 = net income – dividends Net income = Revenue – Expenses Total Assets are anything the company has in their possession o For example: inventory, cash, anything prepaid, or anything that is followed by receivable o What is not an asset? Liabilities, expenses, revenues, earnings, dividends, or anything followed by the word payable Current Ratio = Current Assets / Current Liabilities CHAPTER 2 Generally Accepted Accounting Principles (GAAP) Qualitative Characteristics (subject to Cost Constraint) o Fundamental Relevance- makes a difference in a decision Materiality- large enough difference Faithful representation- complete, neutral, and free from error o Enhancing Comparability- consistency is key; allows for external and internal comparisons Verifiability- when independent parties reach the same consensus Timeliness- available to users before it loses its ability to make a difference on decisions Understandability- average person with basic business knowledge can understand Assumptions o Economic Entity- each company is accounted for apart from its owners o Continuity (Going-Concern)- the company will be in existence to carry out commitments o Time Period- companies can divide time into artificial periods to solve problems as they arise o Monetary Unit- record everything in the same monetary unit (no conversions) Principles o Historical cost- we record what we had to give up to acquire the asset o Revenue recognition- revenue is recorded in the period in which it was earned o Expense recognition (matching)- expenses should be recorded when they are incurred o Conservatism- avoid overstating assets or income Accounting Cycle (Steps 1-4) 1. Analyze Transactions a. Write down the accounting equation b. Which elements are affected in the transaction c. Do the elements increase or decrease 2. Journalize Transactions 3. Post to the Ledger 4. Prepare a Trial Balance Expanded Accounting Equation Assets = Liabilities + Stockholders' Equity Assets = Liabilities + (Contributed Capital + Retained Earnings) Assets = Liabilities + (Beginning Retained Earnings + [Revenues - Expenses] -Dividends Important Vocabulary Double-entry accounting- two or more transactions are affected Handwritten Notes
Are you sure you want to buy this material for
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'