Accounting Week 1 Notes
Accounting Week 1 Notes ACCT 2013
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This 2 page Class Notes was uploaded by Riley Goodman on Tuesday February 2, 2016. The Class Notes belongs to ACCT 2013 at University of Arkansas taught by James Meyers in Winter 2016. Since its upload, it has received 18 views. For similar materials see Principles of Accounting 1 in Accounting at University of Arkansas.
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Date Created: 02/02/16
Accounting Wednesday, December 2, 2015 2:03 PM What is accounting? People make decisions about companies Company activities measured by Accountants Accountants who relay information to the public Types of Accounting: 1 Investment 2 Lending 3 Regulatory 4 Employment 5 Management 6 Tax Authority What do accountants monitor? Financing - external sources of funding o Stockholders' Equity o Liabilities Investing - purchase and sale of assets o Assets Operating - primary operations of the company o Revenues o Expenses Accounting Equation: Assets = Liabilities + Stockholders' Equity Resources = Claims to resources Own = Owe + Residual for owners Own - Owe = Residual for owners Components of Stockholders' Equity: Assets = Liabilities + Stockholder's Equity Stockholders' Equity = Net Income - Dividends Net Income = Revenues - Expenses Dividends are profits to Owners How do Accountants Communicate? Four basic financial statements: (Order matters) (Used in every kind of business) 1 Income Statement: a Revenues - Expenses = Net Income i Net income is also called profit and earnings ii Expenses = cost of earning revenues iii Net Income = Measure of company's success 2 Statement of Stockholder's Equity: Stockholder's Equity = Common Stock + Retained Earnings Common Stock = Investments by Owners o Ending Common Stock = Beginning Common Stock + Issuances of Common Stock Retained Earnings = All net Income less Dividends over the life of the company o Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends 1 Balance Sheet: a Resources = Claims to Resources b Assets = Resources owned by the company c Liabilities = Creditors' claims to those resource d Stockholders' equity = any resource not claimed by creditors 2 Statement of Cash Flow: a Operating Activities i Cash Inflows ii Cash Outflows iii Net Operating Cash Flows b Investing Activities i Cash Inflows ii Cash Outflows iii Net Investing Cash Flows b Financing Activities i Cash Inflow ii Cash Outflow iii Net Financing Cash Flows Two sets of Accounting Rules: Measurement - Timing and amount Disclosure - Making financial statement Generally Accepted Accounting Principles (GAAP): Financial Accounting Standards Board (U.S. Companies) International Accounting Standards Board (All other Companies) Securities and Exchange Commission - Regulates Stock Market Auditor verifies that rules are followed (Independent of company)
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