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Define Accounting
Accounting is an information and measurement system that identifies, records, and communicates; relevant, reliable , and comparable information
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Define Record/Book Keeping
recording of transactions and events
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Define Financial Accounting
Financial Accounting serves external users by providing them with general-purpose financial statements.
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Define Managerial Accounting
Managerial Accounting serves internal users with reporting to help make decisions
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Name 3 Internal and External Users of Accounting
Internal
- 1.Accounting employees
- 2.Managers
- 3.Controllers
- 4. Auditors
- 5. Sales Staff
External
- 1. Lenders
- 2. Consumers
- 3. External Auditors
- 4. Governments
- 5. Share Holders
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Define Assets
Assets are resources a company owns or controls to yield future benefits.
Equiptment, Buildings, Land, Cash
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Define Recievables
Receivables refer to an asset that promises a future inflow of resources. A company that provides a service or product on credit is said to have an accounts receivable from that customer.
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Define Liabilities
Liabilities are creditors claims on assets reflect companies obligations to provide assets products or services to others.
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Define Payable
Payable refers to a liability that promises a future out flow of resources
Wages, AP, Notes Payable, Taxes Payable
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Define Equity
Equity is an owners claim on assets.
Equity= Assets - Liabilities
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What is GAAP
Generally Accepted Accounting Principles
are concepts and rules for ethical accounting
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SEC
Securities and Exchange Commissions
is a government agency that has the legal authority to set GAAP
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FASB
Financial Accounting Standards
This is a local private board that sets both broad ans specific principles
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IASB
International Accounting Standards Board
is an independent group that issues IFRS
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IFRS
International Financial Reporting Standards
Identify international preferred accounting practices
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4 Principles
- 1. Measurement Principle AKA Cost Principle
- Based on actual cost
- 2. Revenue Recognition
- States when a company must
- recognize when revenue is incurred
- 3.Expense Recognition AKA Matching
- Principle
- States when an expense is incurred
- 4. Full Disclosure Principle
- State that a Company must report
- details behind financial statements
- that would impact users decisions.
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4 Assumptions
1. Going Concern Assumption
- Assumes that a business will continue
- and report at cost
- 2. Monetary Unit Assumption
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- Assumes that we can express
- transactions and events in a monetary or
- monetary or money units
- 3. Time Period Assumption
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- Assumes that a life of a company can be
- broken into time periods
4. Business Entity Assumptions
- Assumes that a business is accounted for
- seperatly from other entities
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Income Statement
IS describes a companies revenues and expenses along with the resulting net income or loss over a period of time due to earnings and activities
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Statement of Owners Equity
Explains Changes in Equity from net income or loss and from any owner investments and withdraws over a period of time
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Balance Sheet
Describes a company's financial position (types and amounts of assets liabilities and equity) at a point in time.
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Statement of Cash Flow
Identifies cash inflows receipts and cash outflows , and payments over a period of time.
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Liabilities=
Equity - Assets
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Equity =
Assets - Liabilities
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Breakdown of Equity includes
+Owner capital - Owner Withdraws + Revenues - Expenses
Assets = Liabilities + Owner capital - Owner Withdraws + Revenues - Expenses
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