Preview

Intro to Accounting Notes

Good Essays
Open Document
Open Document
563 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Intro to Accounting Notes
Chapter 1 Notes: Accounting & the Business Environment

Accounting: The information system that measures business activities, processes the information into reports, and communicates the results to decision makers.

Two Major Fields of Accounting:
1) Financial Accounting: The field of accounting that focuses on providing information for external decision makers.
2) Managerial Accounting: The field of accounting that focuses on providing information for internal decision makers.

Certified Public Accountants (CPAs): Licensed professional accountants who serve the general public.

Certified Management Accountants (CMAs): Certified professionals who specialize in accounting and financial management knowledge that typically work for a single company.

Financial Accounting Standards Board (FASB): private organization that oversees the creation and governance of accounting standards.

Securities and Exchange Commission (SEC): the US government agency that oversees the US financial markets.

Generally Accepted Accounting Principles (GAAP): the main US accounting rule book, created and governed by the FASB.

Cost Principle: states that acquired assets and services should be recorded at their actual cost.

Going Concern Assumption: assumes that the entity will remain in operation for the foreseeable future.

Accounting Equation: Assets=Liabilities + Equity

Assets: an economic resource that is expected to benefit the business in the future.

Liabilities: debts that are owed to creditors.

Equity: the owners claim to the assets of the business.
Retained Earnings: capital earned by profitable operations of a corporation that is not distributed to stockholders.

Net Income: the result of operations that occurs when total revenues are greater than total expenses.

Revenues: amounts earned from delivering goods or services to customers.

Expenses: the cost of selling goods or services.

Steps to Analyze a Transaction

You May Also Find These Documents Helpful

  • Good Essays

    14). The Balance sheet gives the exact money value worth of the assets over the liabilities of the company as of the specified time mentioned. The Balance sheet formula is “Assets = Liabilities + Stockholders’ Equity” (Kimmel et al., 2009, p. 14). The various resources possessed by a business such as property, cash, and equipment are Assets. Liabilities include the company’s payables to creditors and owners; the owner capital is also-called as Owner’s equity. A public company publicizes its Balance sheet to the general public. The creditors and investors use this statement to decide if they will invest in or lend to this company. The investors will see the likelihood of their money being repaid by the…

    • 749 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Sarbanes Oxley Memo

    • 1426 Words
    • 6 Pages

    SOX is administered by the Securities and Exchange Commission (SEC). The SEC sets deadlines for compliance and publishes rules on requirements. The Securities and Exchange Commission (SEC) is the department to which all publicly-traded companies, effective since 2004, are required to submit annual reports of the effectiveness of their internal accounting controls. The SEC has broad authority over all aspects of the securities industry. This includes the power to register, regulate, and oversee brokerage firms, transfer agents, and clearing agencies. Along with them, is the FASB.…

    • 1426 Words
    • 6 Pages
    Powerful Essays
  • Good Essays

    U.S. Gaap vs. Ifrs

    • 780 Words
    • 4 Pages

    The Financial Accounting Standards Board (FASB) developed the United States Generally Accepted Accounting Principles (GAAP) has been used in US corporations for over 75 years. It allows financial statements from all corporations to be compared accurately and efficiently, and serves as a guideline for accountants.…

    • 780 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    The FASB Accounting Standards Codification® is the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities.…

    • 823 Words
    • 4 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Fasb System Orientation

    • 740 Words
    • 3 Pages

    The FASB codification system is a database system set-up for the authoritative combination of GAAP to be found in one place. A person does not have to search several sites and accounting board standards to find accounting information. “This site is designed to allow users to offer feedback, perform research, and view site contents” (About the FASB codification system, 2012, p. 1).…

    • 740 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Accounting Chapter 1

    • 521 Words
    • 3 Pages

    The amount of net income kept in the corporation for future use, not distributed to stockholders as dividends.…

    • 521 Words
    • 3 Pages
    Satisfactory Essays
  • Better Essays

    Equity is money that belongs to the owner or owners and investors after all debts in relation…

    • 659 Words
    • 3 Pages
    Better Essays
  • Satisfactory Essays

    acc/537 outline

    • 288 Words
    • 3 Pages

    Financial accounting standards board (FASB) standard categorizes the major sources of generally accepted accounting principles (GAAP) as:…

    • 288 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    Financial statements are general purpose, external financial statements prepared according to generally accepted accounting principles. Some terms that apply to the financial statements include:…

    • 5433 Words
    • 22 Pages
    Powerful Essays
  • Satisfactory Essays

    Managerial accounting differs from financial accounting in that managerial accounting is for internal decision making and does not have to follow any rules issues by standard-setting bodies. This data provided can be used to control or improve the operation of the business.…

    • 636 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Managerial accounting is aimed at providing data for Internal users, such as management of that company, senior supervisors, and other employees.…

    • 434 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Becoming an accountant there are many guidelines and regulations that one must become aware of. The FASB assists in establishing these guidelines through generally accepted accounting principles, GAAP. As an accountant one must follow GAAP while producing any reports for a business. Consequently, the author will explore the FASB Codification System, its purpose, and contents.…

    • 371 Words
    • 2 Pages
    Satisfactory Essays
  • Better Essays

    This equation can be understood in several ways. The simplest interpretation is that the value of a company is represented by the difference between what things of value it possesses (the equity) and what it owes (is liable for). Equities include cash, money owed to the…

    • 1020 Words
    • 5 Pages
    Better Essays
  • Good Essays

    - Financial Accounting – Provides information to people who are external to the entity. (E.g.…

    • 13709 Words
    • 55 Pages
    Good Essays
  • Better Essays

    Financial Accounting Notes

    • 1915 Words
    • 8 Pages

    Retained earnings are affected by revenues, expenses and dividends. Dividends are effectively accounts payable, and hence liabilities.…

    • 1915 Words
    • 8 Pages
    Better Essays