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    © All Rights Reserved
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    2 views8 pages

    Chapter 1&2

    Uploaded by

    Areeba Qureshi

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    of 8
    h *- 7 i ERAN AL UREAL > nase WORST NEE. Ce Aecoonting-> language © lpusiness 5 ‘Gita Wrameass|stouwe en | Seba: do hore for profi Financial Resounting for mere, iavestmmenlar ae Chapter Land Shopper 2 Summary. sap 7 Prccounting Language » sew 00d arma prope # oft te ache Of Awe Oe. . ; | iv quide lreuord » corpsrations to Go m uniting eesti Erba to users wth enteaneds A. INTERNAL ~ Managers, HR, Marketing, Finance -» Momagerial B. EXTERNAL — Investors, Customers, Suppliers, Gov't, Auditors » Financial > GARP C. GOVERNMENT» Tax» IRC Communication| Finandul Statement () dur ap Preparatiin Wak wevare Yond Me is important Kane. fer, ‘income siatement~epors revenues and expenses over a period of time je cli “revenues are amounts eared for seingproducs/proviing services Pr whet Youeoured Pe ieircevccers mdr pice teeing agate amen Reames eee : gis al pep (ALA gr Peabo Sl tht ALPS Chong cons edn RABE TS Frid ft nosed Communicates bow Me votes kept i by net income and decreased by dividends NOT an expense)-ine busine Pokrartemnen 5 -dividends are payments of earnings to stockholders (owners) Th Busenen (zen Report, _C. Balance Sheet — reports assets, liabilities and stockholders’ equity at a point in time? Fe guneas Caividenss). 2 Rescues sss ay resources neon by 3 busines that ris (ure economies as, Ser A bites See) obligations and Se WTO esto cat aes ‘ue wena equity sonnership claims to assets and consists of retained earnings and common stock A Siseas 8° "Cash How Statement - reports information about cash receipts and cash disbursements over a period of time in | the three principal business activities (operating, investing, financing) “fre viz eed het ener te | 4 GGme from = ved, Chapter 2 — |Gemeraity Recep Ed Rerovwdiny Pyinipter/Yuhes oma veandauds for hav Francia) Mansackions ancl? (A. GAAP Accounting rules recognized as a general guide for financial reporting and include: Score seg oO amd Camm. Qualities of Useful information -Materiality: an item is material when its size (amount) is likely to affect/influence the decision of an investor/creditor/user. ‘Assumptions in Financial Reporting -economic entity assumption: every économic entity\pan be separately identified and accounted for (ie personal vs, business ~ separate accounting records) : "™™©41_ monetary unit assumption: only those activities/things expressed 1iSS dre included in accounting records 2.2. -going concern assumption: business will remain in operation for the foreseeable future ei ne «-erioiity assumption: ife ofa business can be divided in artificial time periodS)ind reports for those periods can be prepared. ( ¢ 0 0 r Principles of Financial Report historical osPprinciple: dictates that companies record asses at theif cost) gz. Gai vaue prince settle liability) idicates that assets and liabilities are reported a faitvalue (price received to sel asset or full disclosurp principle: requires companied to inanciat statement users. B. Classified Balance Sheet (see page 49) Assets Current Assets cash Short deve \nvesbrre ny Accounts Receivable (A/R) ~ amounts owed to business from credit sales to customers, Inventory ~ products/items intended to be sold to customers Supplies — inexpensive items that help conduct normal business operations Prepaid Expenses. items purchased in advance of being used (i.e. Insurance, rent) Long Term Investments GAIovesmens Property, Plant and Equipment (PPE) estments, Land ert Foy Fuluce wre. Land, Buildings, Machinery/Equipment, Land improvements Intangible Assets Patents/Trademarks/Copyrights/Slogans— value is based on the rights/privileges it provides to the owner ies bnen Yeo swe Current Liabilities ~ amounts expected to be paid to settle debts within 1 year Payables ~ amounts owed for a specific reason (ie. accounts payable (A/?), salaries payable, utilities payable, wages payable taxes payable). | __ nora vewenuee Unearned Revenue ~ amounts received from customers in advance of services being provided ere eae varies Long Term Liabilities - amounts expected to be paid to settle debts due over 1 year (Hote®Payable (i.e. mortgages, car loans) ‘ond Payable — amounts borrowed for business expansion Stockholders’ Equity Retained Earnings ~ earnings (net income) retained in the business (not paid out in di ic yp © Common Stock—amounts contributed to the business in exchange for ownership grow Chapter 1 and Chapter 2 Classroom Exercises BE1-8. Use basic accounting equation. (LO 3), AP Use the basic accounting equation to answer these questions. @ ‘The liabilities of Lantz Company are $90,000 and the stockholders’ equity is $230,000. What is the amount of Lantz Company's total assets? ASCO = Uobuiries+equdy 499004 230,000 (b) 29320, 600 | ‘The total assets of Salley Company are $170,000 and:festocitrolders’ equity is $80,000. What is the amount ofits total liabilities? Linisisria ~ 110,000 -ff910,008} oO cia ad The total assets of Brandon Co. are $800,000 and its liabilities are equal to one-fourth of its total assets. What is the amount of Brandon Co.'s stockholders’ equity? Loalotitins 20 Equal BE21. Classify accounts on Bi (L01),K ‘The following are the major balance sheet classificati Current assets (CA) Current liabilities (CL) Long-term investments (LTI) Long-term ies (LTL) Property, plant, and equipment (PPE) Common stock (CS) Intangible assets (1A) Retained earnings (RE) Match each of the following accounts to its proper balance sheet classification. CL Accounts payable Ch. Accounts receivable Guy ee depreciation -s povlion Tne is weed to be ur

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