FINANCIAL ACCOUNTING ACC 201
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This 3 page Class Notes was uploaded by Monique Langosh on Sunday October 25, 2015. The Class Notes belongs to ACC 201 at University of Nevada - Las Vegas taught by Sevalstad in Fall. Since its upload, it has received 39 views. For similar materials see /class/228645/acc-201-university-of-nevada-las-vegas in Accounting at University of Nevada - Las Vegas.
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Date Created: 10/25/15
Sabrina Beal Accounting 201 002 Chapter 1 1 Forms of Business Organization You have three choices of what organizational form your business may have sole proprietorship partnership or corporation a A business owned by one person is a Mu 39 It is simple to set up and gives you control over the business barber shop law offices i Simple to establish ii Owner controlled iii Tax advantages b A business owned by two or more persons associated as partners is a They are often form ed because one individual does not have enough economic resources to start or expand the business lawyers doctors CPA s Partners bring unique skills or resources to partnership 1 Simple to establish iii Shared control iv Tax advantages c A business organized as a separate legal entity owned by stockholders shareholders is a As an investor in a corporation you receive shares of stock in indicate your ownership claim i Easy to sell transfer ownership ii Easier for corporations to raise funds iii No personal liability but higher taxes H Users and Uses of Financial Inform ation The purpose of financial information is to provide inputs for decision making is the information system that identifies records and communicates the economic events of an organization to interested users Users of accounting information can be split into two groups Internal and external users 11 llw ll 1 Managers who plan organize and run a business marketing managers production supervisors finance directors and company officers 1 There are multiple types of external users Investors owners make decisions to buy hold or sell stock Creditors such as suppliers and bankers evaluate the risks of selling on credit or lending money HI Business Activities All businesses are involved in three types of activitiesifinancing investing and operating The accounting information system keeps track of the results of each of the various business activities i Persons or entities to whom someone owes money are creditors Amounts owes to creditorsin the form of debt and other obligationsare called hall 1 Note payable 2 Bonds payable ii A corporation may also retrieve funds by selling shares of stock to investors 3 urn warm is the term used to describe the total amount paid in by stockholders for the shares they purchase Many corporations make payments to stockholders on a regular basis as long as there is sufficient cash to cover required payments to creditors These payments to stockholders are called vmwmn i A growing company buys resources like computers vehicles furniture and buildings These resources owned by a business are called rm ii IV Communicating with Users Assets liabilities expenses and revenues are of interest to users of accounting information The information is arranged in four different financial statements i To get a picture of what your business owns assets and what your business owes liabilities prepare a balance sheet ii To show the success of your business during a period of time you report its revenues and expenses in an income statement iii To find out how much of previous income was given to you and the other owners of your business in the form of dividends and how much was retained in the business to allow future growth you present a retained earnings statement iv To show where your business obtained cash during a period of time and how that cash was used you present a statement of cash flow 1 reports the success or failure of the company s operations for a period of P F balance sheet i ASSETS LIABILITIES STOCKHOLDERS EQUITY The primary purpose of 71 cash receipts and cash payments of a business for a specific period of time US companies that are publicly traded must provide shareholders with an i includes the financial statements and other important information like a management discussion and analysis section notes to the financial statements and an independent auditor s report aw sz lhi aim mm Al covers many financial aspects ofa company including its liability to pay nearterm obligations its ability to fund operations and expansion and its results of operations professionals who conduct an independent examination of a company s financial statements Only 39ll w A EWDMIML EISII accountants who meet certain criteria and attain the designation L r may perform audits A comparative statement is a presentation of the financial statements of a company for more than one year SarbanesOxley Act is the regulations passed by Congress in 2002 to try to reduce unethical corporate behavior
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