Accounting 200, week 1 notes
Accounting 200, week 1 notes ACCT 200-010
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This 4 page Class Notes was uploaded by Loretta Hellmann on Sunday August 28, 2016. The Class Notes belongs to ACCT 200-010 at Western Kentucky University taught by Stacy Wade (Bibelhauser) in Fall 2016. Since its upload, it has received 46 views. For similar materials see Intro Accounting-Financial in Accounting at Western Kentucky University.
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Date Created: 08/28/16
Week 1 Notes Tuesday, August 23, 2016 11:34 AM 8/23/2016 Chapter 1 Accounting- the language of business Users of Financial Information Internal users People within the company using the accounting data like supervisors, managers External users Parties outside the business interested in how something is run: like investors, banks and creditors, competitors, stockholders, government Accounting "Rules" Generally accepted Accounting Principles (GAAP) Publically traded companies need to be audited every year by an accounting company to verify that they're following GAAP Business Activities Financing Activities- how do we finance a business Borrowing- through bank loans or borrowing from family etc. "Liabilities" - debts or obligations of the company Interest on debt Investors- Contributions by investors who are now partial owners in the company Owner's equity or Stockholder's equity Common stock Dividends- profit distributed to owners Investing Activities Assets- resources owned by the company, things of value If these things last longer than a year they are called "noncurrent assets" Things that last less than a year like gas and fertilizer are "current assets" This IS NOT an investment activity Operating Activities Earnings of the Business "revenues" Costs of running a business "Expenses" Net profit= revenues - expenses 8/25/2015 Almost everything within a company can be categorized into these 5 categories: 1. Assets Anything titled with "receivable" is an asset to the company, something that is OWED to the company by someone else Accounts receivable Employee receivable Tax receivable "Prepaid" means you've paid for more than one payment and the value that is left is an asset Prepaid insurance Prepaid rent 2. Liabilities Anything with "payable" in the title Unearned revenue Ex: a gift card. Said company will have $25 cash asset but haven't sold that $25 worth of merchandise, it is a liability because they owe $25 worth of merchandise to somebody else 3. Equity Common stock Retained Earnings dividends 4. Revenues Service Revenue Sales Revenue Interest Revenue Fees Earned 5. Expenses Utilities Exp. Rent Exp. Insurance Exp. Cost of Goods Sold Financial Statements 1 Income Statement Shows how profitable the company was the period It details the profitability of the business Revenues and expenses Net income is "revenues- expenses" 2 Retained Earnings Statement Shows the change in retained earnings for the period Retained earnings are how much of the prior profits they've put back into the company whether it be just money or other assets Beginning retained Earnings Add: Net Income Subtract: dividends (anything they distribute to owners) Ending Retained Earnings 3 Balance Sheet Shows the financial position of a company on a given date Snapshot company Assets, liabilities, and equity 4 Cash Flow Statement
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