ACCT 1-4.txt

• Manufacturing businesses
• Merchandising businesses
• Service businesses

• Sole proprietorships
• Partnerships
• Corporations

An information sytem designed to capture and communicate a business's financial condition and performance to decision makers inside and outside the organization

Employed by a single business of nonprofit organization

Charge fees for services to a variety of businesses and nonprofit organizations

The area of accounting that produces financial information for internal users

The area of accounting that prpduces financial information for external users

Primarily managers, sole proprietors, and partners

Primarily bankers, suppliers, governments, and stockholders in corporations

Assets = liabilities + owner's equity

• Assets
• Liabilities
• Owner's equity
• revenues
• expenses

Measurable economic resources that the business owns and are likely to provide future benefits

Measurable and probable obligations that require the business to pay cash or deliver goods or services to others in the future

The difference between the assets the Business owns and the liabilities it owes

The amounts that the business earned in delivering goods and services to customers

The amounts of resources an entity used to earn revenues during a period

• To report the performance of a business over a period of time
• Revenues - expenses = net income

• To report the changes in owner's equity for a period of time and link the income statement to the balance sheet
• Beg owner's equity + add investments + net income - wihdrawls = owner's equity

• To report the Amount of a business's assets, liabilities, and owner's equity at a particular point in time
• Assets = liabilities + owner's equity

• Cash
• Short-term investments
• Accounts receivable
• Inventory
• Supplies
• Prepaid expenses
• Land
• Building
• Equipment
• Long-term investments
• Intangible assets
• "specific type of" asset

• Accounts payable
• Short-term notes payable
• Wages payable
• Taxes payable
• Interest payable
• Unearned revenues
• Long-term notes payable
• Bonds payable
• "specific type of" payable

• "proprietor's name" capital
• "proprietor's name" drawing

• Sales revenue
• Fee revenue
• Investment revenue
• Pizza revenue
• "specific type of" revenue

• Cost of goods sold
• Advertising expense
• Insurance expense
• Rent expense
• Interest expense
• Wages expense
• Supplies Expense
• Utilities expense
• "specific type of" expense

• D debit
• E expense
• A asset
• D drawing

• C credit
• U -
• R revenue
• L liabilities
• S Stockholders equity

• Left side of t-accounts
• Increase assets and decrease liabilities and owners equity

• Right side of t-accounts
• Decrease assets and increase liabilities and owners equity

Every transaction affects at least two accounts

• 1. Analyze transactions
• 2. Record journal entries in the general ledger
• 3. Post amounts to the general ledger
• 4. Adjust revenues and expenses and related balance sheet accounts
• 5. Prepare a complete set of financial statements
• 6. Close revenues, gains, expenses, and losses to owner's equity

Used to record financial information in the accounting system, which is later summarized by account in the ledger

• Summarizes transaction effects for each account
• Assets: show increases on the left (debit) side and decreases on the right (credit) side
• Liabilities and Owner's Equity: show increases on the right (credit) side and decreases on the left (debit) side

• prepared at the end of the accounting period prior to preparing the financial statements
• Each account is listed along with its debit or credit balance
• Purpose is to check that debits equal credits

• Separately classifies assets as current if they will be used up or turned into cash within one year
• Liabilities are classified as current if they will be paid, settles, or fulfilled within one year

The process by which a company acquires and pays for goods and services and then sells goods and services to customers who pay cash to the company

Financial performance is measured as the difference between cash received and cash paid during a period.

• Revenue principle: recognized (record) revenues when they are earned
• Matching principle: Recognize (record) expenses when they are incurred in generating revenue
• GAAP

A list of all accounts and their unadjusted balances and is used to check on the equality of recorded debits and credits

earned when there is an exchange of a business's products of services for cash or a promise to pay cash

incurred to generate revenues

• Unearned revenues
• Accrued revenues
• Prepaid expenses
• Accrued expenses

Cash was received before it was earned

Cash will be received after being earned in the current period

Cash was paid for an asset before it was used to generate revenue

Cash will be paid after the expense was incurred

• CE1: Revenue to income summary
• CE2: Expenses to income summary
• CE3: Income summary to owner's equity
• CE4: Capital to Drawing account

NPM = (net income/sales revenues) x 100