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Accounting 225, Week 1 Notes

by: Taylor Hall

Accounting 225, Week 1 Notes ACCT 225

Marketplace > University of South Carolina > ACCT 225 > Accounting 225 Week 1 Notes
Taylor Hall
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About this Document

These notes are what we covered the first week of class. This includes Chapter One discussing the basics of Accounting and different Financial Statements
Intro to Financial Accounting 225
Shannon D McCutchen
Class Notes
financial accounting, Accounting




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This 2 page Class Notes was uploaded by Taylor Hall on Friday August 26, 2016. The Class Notes belongs to ACCT 225 at University of South Carolina taught by Shannon D McCutchen in Fall 2016. Since its upload, it has received 122 views.


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Date Created: 08/26/16
Accounting 225: Chapter 1:  For-profit Businesses/Publicly Traded  Accounting: Information measurement system that identifies and communicates information that is relevant and reliable o General Types of Businesses:  Sole-proprietorship: business is owned by one person  Partnership: business is owned by two or more people  Corporations: business is legally separate from its owners  Limited liability of stockholders  The taxes are doubled: o The net income is taxed o The dividend given to the stockholders are also taxed  Publicly traded companies have to follow certain rules o Assets: resources, anything that you own or control that brings you a benefit o Liabilities: Others/creditors’ claims on assets; amounts owed to creditors (IOU) ex: bankers o Stockholders Equity: Owners claim on the asset o Revenue: amount recorded for goods/services sold o Expenses: costs for providing those goods/services Assets= Liabilities + Stockholders Equity Purchase car for 40,000$ and put down 4,000$ Car (40,000)= Bank (36,000) + Mine(4,000) Financial Statements: Must do these in order 1. Income Statement: Revenue – Expenses = Net Income 2. Statement of Stockholder’s Equity: a. Common Stock: b. Retained earnings: c. Common Stock + Retained Earnings = Stockholder’s Equity (Beginning CS + Issued CS) + (Beginning RE + Net Income – Dividends) = STE 3. Balance Sheet: Assets = Liabilities + Stockholder’s Equity 4. Statement of Cash Flows: measures activities involving cash receipts and cash payments over an interval of time a. Operating Activities: transactions that relate to the primary operations of the company b. Financial Activities: transactions the company has with investors and creditors c. Investment Activities: transactions involving the purchase and sale of resources that provide benefit for several years (like equipment) i. Long term assets: purchase and sale of equipment and other resources that last for more than a year  Rules of Financial Accounting: o Generally Accepted Accounting Principles (GAAP): make formal standards  Underlying assumptions  Economic Entity: assume the business is separated from the owner  Monetary Unit: Can assign monetary unit to transactions that do not involve cash  Periodicity: can divide the life of the business into certain periods of time  Going Concern: Assume that the business is going to continue o Securities and Exchange Commission (SEC)  Financial Accounting Standards Board (FASB): governed by SEC  United States follows these groups o International Accounting Standards Board (IASB)  Global  Auditors: Trained individuals hired by a company as an independent party to express a professional opinion of the extent to which financial statements are prepared in accordance with GAAP o Ensure that management has appropriately applied GAAP in financial statements o Help investors and creditors make decisions by adding credibility to financial statements  Objectives of Financial Accounting: o Useful to investors and creditors in making decisions o Helps predict cash flows o Tells about economic resources, claims to resources, and changes in resources and claims Accounts Receivable: what other people owe you, it is considered an asset


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