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Wk. 1 Accounting 204-10

by: Alexandra Notetaker

Wk. 1 Accounting 204-10 ACCT 204-10

Marketplace > Montclair State University > ACCT 204-10 > Wk 1 Accounting 204 10
Alexandra Notetaker
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About this Document

Covering chapter one. Types of accounting, asset, liabilities, equity etc.
Jeffrey Warren
Class Notes
Accounting, assets, claims, liabilities, equity




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This 3 page Class Notes was uploaded by Alexandra Notetaker on Tuesday September 13, 2016. The Class Notes belongs to ACCT 204-10 at Montclair State University taught by Jeffrey Warren in Fall 2016. Since its upload, it has received 40 views.


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Date Created: 09/13/16
ACCT 204-10 9/8/16 Class 1 Chapter 1 Accounting- a language, an information system for numbers Business Perspective- served to be used as a ‘report card’ User of a number=State owner Public perspective: the purpose of accounting is so the public can view the results of the ‘report card.’ Used to help the public chose if they want to invest in a particular company. Internal perspective: reports to the manager, they checked monthly, quarterly, annually or even more frequently. Managers want to see important things and be able to report sales and can predict the future sales. If accounting is designed properly, management can run properly and can determine the future sales. If designed improperly, there will be holes in the system. Financial Resources: individuals or companies need financial resources (money) to establish and operate their businesses. Found through investors and creditors. Financial Accounting: Focused on the needs of the external or public users, creditors, shareholders etc. Includes the CPA- auditing the books from the outside Managerial Accounting: Focused on the needs of internal users, internal management, board of directors. Some things aren’t shared with the public because it can affect the competitors and the business, therefore some information is kept private. Types of accounting: Financial accounting Managerial accounting Tax accounting Government accounting Non-profit Forensic accounting Auditing (public or internal) Construction or project accounting Public- CPA Private- CRA Reporting entities: financial accounting reports disclose the financial activities, reporting entities. Basic Financial Statements: Balance sheet or statement of financial position Summary of assets, liabilities and ownership equity are listed on a specific date, one exact time and date. Income statement Financial statement showing the profit or loss sustained by a company during a particular period. Asset: claims, anything that provides future benefit. Liability: something you owe money or something to. Equity: Assets – Liabilities = Equity Assets - Claims Claims on the assets are from 2 sources: 1) creditors (liabilities) 2) investors or owners’ (equity) Assets = Liabilities + Equity Everything that you own, that has future value is an asset. If you have assets, you have liabilities. Whatever you owe are claims for services or goods. Claims are known as ‘liabilities’ Retained Earnings: Revenues - Expenses=Net Income, always goes to retained earnings. The accumulation of gains or losses, goes towards retained earnings. Dividends come out of retained earnings. Refers to net income, increase. Dividends, decrease. Revenues less expenses. Notes during in class work: **Asset source transaction- money comes in from other sources. **Dividends come from retained earnings, it does not come from expenses. **If paid in cash, there is no liability. It is settled and nothing is owed. **Total assets will be equal to total equity. Example: “The land that RCS paid 500K to purchase, had an appraised market value of 525K.” **This doesn’t get placed anywhere on the balance sheet.** Historical Cost Concept: requires that most assets be reported at the amount paid for them regardless of the market value. Reliability Concept: information is reliable if it can be independently verified. Appraised values are opinions and will vary from appraiser to appraiser. Types of transactions: Asset source- increase total assets, increase total claims Asset exchange- increase one asset, decrease another asset Asset use- decrease total assets, decrease total claims Assets = liability + equity Assets: what is worth something Liability: what you owe Equity: common stock, retained earnings Liquidity: How quickly you can convert something into cash, assets are in order of liquidity.


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