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Acc 203 September 9, 2015

by: Amanda Lee Sedor

Acc 203 September 9, 2015 ACC 203

Marketplace > Pace University > Accounting > ACC 203 > Acc 203 September 9 2015
Amanda Lee Sedor
GPA 4.0
Financial Accounting
Bairj Donabedian

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Discussed in this note packet all topics from week one Accounting 203, September 9, 2015: First two Axioms of Accounting, Assets, Liabilities, Stockholders' Equity, Retained Earnings, Limited Liabi...
Financial Accounting
Bairj Donabedian
Class Notes
Acc 203, September 9, First two Axioms of Accounting, assets, liabilities, Stockholders' Equity, Retained Earnings, Limited Liability, Examples
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This 6 page Class Notes was uploaded by Amanda Lee Sedor on Sunday September 13, 2015. The Class Notes belongs to ACC 203 at Pace University taught by Bairj Donabedian in Fall 2015. Since its upload, it has received 164 views. For similar materials see Financial Accounting in Accounting at Pace University.

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Date Created: 09/13/15
September 9 2015 Business Transactions Supply Chain Other businesses supply our business with products and Services recorded as accounts payable when on Credit this means we still need to pay the company back We supply products and services to other people Recorded as accounts receivable when bill is sent to customer but money has not yet been received from customer Usually most transactions are done on credit Axiom 1 Revenues arise when work is done irrespective of cash In ow Axiom 2 Expenses arise when resources are used irrespective of Cash out ow Cash in ows and out ows are Irrelevant to recording Revenue amp Expenses 95 of the time transactions are credit bases why we record when work done for revenue because not usually paid right away since on credit When buy factory can record until use Depreciation spread cost out through years that resource is used this does not have anything to do when paid just when recorded can pay full amount right away or spread out through out the years used Amortization depreciation for intangible objects such as patents and copyrights Depreciation leads to time differences between payments and when recorded in revenue and expenses My extra notes based on W below Assets Cash Accounts Receivable arise because company does business and customer puts on credit no contracts the fact customer will pay is based on trust Prepaid Expenses Stuff the company buys in advance insurance tech support this is an asset because we are receiving something not expense when buy but will become an expense when used Inventory don t want too much inventory sitting around because this holds up cash Company wants just enough not too little and not much enough to supply customers desires but not too much to have extra Equipment Accumulated Depreciation Equipment contraaccounts measures wear out of an asset such as equipment how much is the asset now worth after this amount of use time has past Ex bought a truck 2 years ago has 10year life 20 life gone What is the value now how much is the truck worth now to the company Buildings Accumulated Depreciation Buildings contra accounts Land Intangible assets Liabilities There is tax liabilities pays government for their services roads to travel on police protection Accounts Payable arises when we as a business owe other businesses money because we used credit to pay for work that was done Unearned Revenues Arises when our business sells insurance support or gift cards someone has paid for a service or product but work has don t been done yet EX Microsoft gets money for tech support for a future period but job not done yet so the money has not yet been earned Work still needs to be done time must conclude Notes payable company borrows money from bank Bonds Payable company borrows money from the public by issuing bonds Stockholders Equity Raise money for company through selling shares of company Of the company a shareowner owns also is the power of his or her vote Common Stock Retained Earnings Dividends contraaccounts Assets verses Liabilities and Stockholders Equity balance out Retained Earnings Assets what the company has Liabilities raise money by borrowing Common stock selling shares amp Retained earnings reinvesting How did we get the stuff that the firm has Why do Assets Liabilities Dona ons Borrowing from people bonds payable or the bank notes payable Common Stock sell shares of the company partnerships Retained Earnings profits from the company are reinvested into the company Stockholders Equity Dividends extra profit paid to shareholders When there is extra profit the company must decide if the extra should go to shareholders by dividends or go back in to the company as retained earnings Dividend Decision Dividend Retained Earnings Goes to the shareowners goes back to company Spend some reinvest Apple just gave out its first dividends Are no exceptions to accounting rules Income Statement Distribute to Wealth Cost of resources Left over Shareownel Created used to create wealth wealth Reinvested into the company Dividends Revenue Expenses Net Income Retained Earnings Limited Liability Covers owner s personal assets from being taken if their Company is hurt in a law suite or the company falls This Way the owner can only lose what they put into the Company not what the owner personal own Company will have its own account so when starting the business the owner puts their money being used for the business into the business s account Ex Children die from chewing on a product from a company the company is sued and must pay the families for what they have gone through but the settlement amount is more than the company owns Therefore everything the company owns goes to these families but where does the rest of the money come from This money cannot come from the owner s personal assets Therefore the families cannot take anything from the owners except for what they have put into the business This is because Limited Liability protects the owner s personal assets from being taken in case of a law suite Therefore the extra money must come from taxes and the government EX Common stock name Lady Gaga Tattoo Boutique Inc Owner Lady GaGa but money placed in another account under company name Lady GaGa still owns but now owns indirectly


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