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AC 210 Week 1 Notes

by: Carter Cox

AC 210 Week 1 Notes AC 210

Carter Cox

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Cover notes taken on over the first week of class. Intro to accounting
Intro to Accounting
Lisa McKinney
Class Notes
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This 4 page Class Notes was uploaded by Carter Cox on Sunday August 28, 2016. The Class Notes belongs to AC 210 at University of Alabama - Tuscaloosa taught by Lisa McKinney in Fall 2016. Since its upload, it has received 147 views.


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Date Created: 08/28/16
AC 210- Day 1 Learning Objective - Describe various organizational forms and business decisions Organizational Forms - Sole Proprietorship o Business organization owned by one person (1 Owner) - Partnership o Business organization owned by two or more people. Each person is liable for all debts of the business - Corporation o Separate legal entity o They are stockholders o Not liable for debts of the corporation The Accounting System (Activities - Operating – business of doing (buying, paying employee) - Investing – taking money from our business and invest back into the business - Financing – taking out a loan or sell stock to stockholder Accounting Reports - Financial o Evaluate the company o External Users (creditors, investors) o Most focused on - Managerial o Run the company o Internal users (managers, supervisors) Basic Accounting Equation - Assets = Liabilities + Stockholders Equity (Ownership) - (Resources owned by the company) = (Resources owed to creditors) + (Resources owed to stockholders) - Separate Entity Assumption o Financial reports of a business are assumed to include the results if only that business’s activities Assets - Economic resources presently controlled by the company that have measurable value and are expected to benefit the company by producing cash inflows or reducing cash outflows in the future - Cash, Supplies, Furniture, Liabilities - Measurable amount that the company owes to creditors - I.O.U o Notes payable (long term), accounts payable (short term) Equity - Owners claim to the business resources o Common stock – equity paid in by stockholders  Money we contribute o Retained Earnings- equity earned by the company  Money you keep from your profits  Money earned over time - Asserts = Liabilities + Equity (Common stock, Retained earning) Revenues, Expenses, and Net income - Revenues (how much we made) – Expenses (how much is cost to make) = net income o Revenue  Sales of goods or services to customers, They are measured at the amount the business charges the customer o Expenses  Costs of doing business necessary to earn revenues, including wages to employees, advertising, insurance, utilities and supplies used Dividends - Distributions of a company’s earnings to its stockholders as a return on their investment - Comes from retained earnings - Not an expense Financial Statements (typically put into this order) - Incomes statement o Reports the amount of revenues less expenses for a period of time) o Revenues  Sales Revenue  Service Revenue  Total Revenues o Expenses  Salaries and wages  Rent  Utilities  Insurance  Advertising  Income Tax  Total o Net Income - Statement of retained earnings o Beginning of month + Net income – Dividends - Balance Sheet o A = l + E o Reports at a point in time  What a business owns  What it owes to creditors  What is left over for the owners of company’s stock o Assets  Cash, accounts receivable, supplies, equipment, software o Liabilities  Accounts payable  Notes Payable o Equity  Common stock  Retained earnings - Statement of Cash Flows o Summarizes how a business operating, investing, and financing activities caused its cash balance to change over a particular time o 8/25/16 Financial Statements - Creditors o IS the company generating enough cash to make payments on loans  SCF o Does the company have enough to cover its liabilities  Balance sheet - Investors o What is the immediate return  SRE o What is the long term External financial reporting - Provide useful financial information to external users for decision making o Useful  Relevant and Faithful representation - Need to be comparable, verifiable, timely, and understandable Accounting Standards - US- FASB- GAAP - World o IASB o IFRS Jobs that Depend on Accounting - Production and Operations Management - Human Resources - Finance - Marketing


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