ACC 200 notes

Ch 1. Accounting Information and Decision Making
Financial accounting: Measurement and communication, measures business activities of a company & communicate to external parties
Managerial Accounting: methods accountants use to provide info to managers (acct 210)
Who needs to make decisions about companies?
Investors
Creditors-lend money
Customers-big customers (i.e. Apple buys memory chips from Samsung)
Suppliers-ability to pay
Managers-production/expansion
Employees-employment opportunities
Competitors-market share/profitability
Regulators-government
Tax authorities-IRS
Local communities-environmental issues
Basic accounting equation: Assets = Liability + Stockholder’s equity
Company’s resources (assets)] Claims to those resources v
Investors and Creditors would like to know about
Liability-amount that you owe to a creditor
Stock holder’s equity-claim on resources that investors have in the company, amount the investor has claims (stockholders-owners) Stockholders and creditors get paid off first if a company goes out of business-creditors before stockholders
Profitability
Revenue>Expenses Net Income  company distributes  Dividends
RevenueExpenses or vice versa (net income or net loss)/if a company can cover expenses
Statement of Stockholders’ Equity: financial statement that summarizes any changes in stockholders’ equity over an interval of time
Common stock + Retained Earnings
Common stock (external source, how much they paid for the stock)
Retained earnings (internal source, cumulative amount of company’s earnings)
Balance Sheet: Accounting equation-financial statement that presents the financial position of the company of a particular date
Assets = Liabilities + Stockholders’ Equity
Statement of Cash Flows: financial statement that measures activities involving cash receipts and cash payments over an interval of time
Know where your cash is at for investors
Classified into 3 categories: operating,