Accounting 200, week 2 notes
Accounting 200, week 2 notes ACCT 200-010
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This 3 page Class Notes was uploaded by Loretta Hellmann on Sunday September 4, 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 14 views. For similar materials see Intro Accounting-Financial in Accounting at Western Kentucky University.
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Date Created: 09/04/16
Week 2 Notes Tuesday, August 30, 11:20 AM Chapter 2 A Further Look at Financial Statements (this was the paper powerpoint handout, given in class) • Standard Classifications Assets □ Current assets □ Long-term investments □ Property, plant, and equipment □ Intangible assets Liabilities and Stockholders' Equity □ Current liabilities □ Long-term liabilities □ Stockholders' Equity • The Classified Balance Sheet Current Assets □ Assets that a company expects to covert to cash or use up within one year or the operating cycle, whichever is longer □ Operating Cycle- is the average time it takes from the purchase of inventory, to the sale of goods, and then to the collection of cash from customer's □ Common types of current assets are : (1) cash, (2) Investments, (3) receivables, (4) inventories, and (5) prepaid expenses □ On a balance sheet Current Assets ◊ Cash and cash equivalents ◊ Short-term investments ◊ Accounts receivable ◊ Inventories ◊ Prepaid expenses ◊ Total current assets □ Companies list current asset acounts in the order they expect to convert them into cash Categorized by "liquidity" Long-Term Investments □ Investments in stocks or bonds of other corporations that are held for more than one year □ Long-term assets such as land or buildings that a company is not currently using in it operating activities □ Long-term notes receivable Property, Plant, and Equipment □ Long useful lives □ Currently used in operations □ Includes land, buildings, equipment, delivery vehicles, and furniture □ Depreciation- allocating the cost of assets to a number of years □ Accumulated depreciation- total amount of depreciation expensed thus far in the asset's life in the asset's life This is a contra-asset It's negative to be subtracted Intangible Assets □ Assets that do not have physical substance □ Includes, goodwill, patents, copyrights, trademarks, or trade names □ Review Question Patents and copyrights are a. Current assets b. Intangible assets c. Long-term investments d. Property, plant, and equipment Current Liabilities □ Obligations the company is to pay within the next year or operating cycle, whichever is longer □ Common examples are accounts payable, salaries and wages payable, notes payable, interest payable, and income taxes payable □ Also included as current liabilities are current maturities of long-term obligations - payments to be made within the next year on long-term obligations □ On a balance sheet Current liabilities ◊ Accounts payable short-term debt ◊ Accrued compensation and benefits ◊ Accrued expenses and other current liabilities ◊ Income taxes payable, et ◊ Total current liabilities Long-Term Liabilities □ Obligations a company expects to pay after one year □ Include bonds payable, mortgages payable, long-term notes payable, lease liabilities, and pension liabilities □ Review Question Which of the following is NOT a long-term liability? a. Bonds payable b. Current maturities of long-term debt c. Long-term notes payable d. Mortgages payable Stockholders' Equity □ Common stock- investments of assets into the business by the stockholders □ Retained earnings- oncome retained for use in business
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