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8/31 Chapter 1 Notes (continued)

by: Rachel Dragoy

8/31 Chapter 1 Notes (continued) ACCT211

Marketplace > SUNY at Binghamton > Accounting (ACCT) > ACCT211 > 8 31 Chapter 1 Notes continued
Rachel Dragoy


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About this Document

These notes cover the second lecture on Chapter 1.
Financial Accounting
Professor Kamlet
Class Notes
Accounting, financial accounting
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This 3 page Class Notes was uploaded by Rachel Dragoy on Thursday September 1, 2016. The Class Notes belongs to ACCT211 at SUNY at Binghamton taught by Professor Kamlet in Fall 2016. Since its upload, it has received 21 views. For similar materials see Financial Accounting in Accounting (ACCT) at SUNY at Binghamton.


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Date Created: 09/01/16
Thursday, September 1, 2016 ACCT 211 Chapter 1 Notes (continued) - Opportunities for Accountants: Prof. K: The demand for accountants exceeds the number of new graduates • entering the market. At Binghamton the focus is Public Accounting at large and mid-size New York City firms. - Accountants working in public accounting want to become Certified Public Accountants - CPAs. • You must complete 150 specific credit hours • Pass the 2-day CPA exam • Work under a CPA for experience • Pay the fee - Accountants work for private companies, the government, non-profits and many other places - The rules for accounting in the US are based on the Generally Accepted Accounting Principles (GAAP). - Accounting Standards: The rules that determine the accounting for individual business transactions. - Accounting Principles and Assumptions: Provide the framework upon which accounting standards are constructed. - Financial Accounting and GAAP are based on the following assumptions: • Monetary Unit Time Period • • Business Entity • Going Concern • Prof. K: Created by a non-governmental organization. 1 Thursday, September 1, 2016 - Financial Accounting Standards Board (FASB): Has the primary responsibility for developing accounting standards. • Prof. K: - Privilege of creating the rules. - These people work hard to make the rules make sense. - Accounting has been created artificially and therefore its rules should be logical and make sense. - Securities and Exchange Commission (SEC): Is an agency of the U.S. government that has authorities over the accounting and financial disclosures for companies whose shares of ownership (stock) are traded and sold to the company. • Prof. K: - Governmental body; You must listen to them. - Legal authority to make all the rules because they withhold the power of law. - All corporations who sell stock in the U.S. must report to the SEC under GAAP. - Rules are generally created by the FASB but given the affect of law through the SEC. - International Accounting Standards Board (IASB): Most countries outside the U.S. use accounting standards and principles adopted by the IASB. • The IASB issues International Financial Reporting Standards (IFRS). • Prof. K: The IASB and the IFRS differ in volume. - Characteristics of Financial Information: Relevant: Information has the potential to impact decision making. • • Faithful Representation: Information accurately reflects an entity’s economic activity or condition. • Prof. K: Financial statements as a whole gives a fair view of what the company represents and what it stands for. 2 Thursday, September 1, 2016 - Assumptions: • Monetary Unit Assumption: Requires that financial reports be expressed in a single money unit and/or currency. • Prof. K: Not affected by inflation. • Time Period Assumption: Allows a company to report its economic activities on a regular basis for a specific period of time. • Prof. K: Going to report for a particular time period. Business Entity Assumption: Limits the economic data in financial reports to that • directly related to the activities of the business and only the business. • Prof. K: Business entity stands on its own. • Going Concern Assumption: Requires that financial reports be prepared assuming that the entity will continue operating in the future. • Prof. K: Accountants are not good predictors of how a company will be. They can not predict if a company will fail or pull itself out and bounce back. - Proprietorship: Owned by one individual. Both face the possibility of losing everything and do - Partnership: Owned by two or more individuals. not pay income tax! - Corporation: Organized under state or federal statutes as a separate legal taxable entity. • Prof. K: Corporations pay income tax! - Limited Liability Company (LLC): Combines the attributes of a partnership and a corporation. 3


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