Beruflich Dokumente
Kultur Dokumente
Chapter 1
Objective 1
Use accounting vocabulary
Accounting
Measures Processes Communicates.. Financial information to decision makers
Decision Makers
Individuals Businesses Investors Creditors Taxing Authorities
Governing Organizations
FASB Financial Accounting Standards Board SEC Securities and Exchange Commission AICPA American Institute of Certified Public Accountants IMA Institute of Management Accountants
Copyright 2007 Prentice-Hall. All rights reserved 6
Ethics
Audit
Examination of companys financial situation Performed by independent accountants
Sarbanes-Oxley Act
Criminal offense to falsify financial statements
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Objective 2
Apply accounting concepts and principles
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GAAP
Generally Accepted Accounting Principles
Accounting guidelines that govern how accountants measure, process, and communicate financial information Formulated by Financial Accounting Standards Board (FASB)
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GAAP
Primary objective of financial accounting provide information that is useful for making investment and lending decisions
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Entity Concept
Accounting Entity organization that stands apart as a separate economic unit
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Cost Principle
Acquired assets and services should be recorded at their actual cost (historical cost)
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Stable-Monetary-Unit Concept
Assumes that the dollars purchasing power is stable
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Objective 3
Use the accounting equation
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Assets
Economic resources, expected to benefit the business in the future
Cash Accounts receivable Prepaid Insurance Merchandise inventory Furniture Land
Other Examples
Building Equipment
Truck Machines
Copyrights
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Assets
Economic Resources
Owner Investments
Revenues
Copyright 2007 Prentice-Hall. All rights reserved
Expenses
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Revenues
Amounts earned by delivering goods or services to customers
Sales revenue Service revenue Interest revenue Dividend revenue
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Expenses
Decrease in owners equity that occurs from using assets or increasing liabilities in the course of delivering goods or services to customers
Salary expense Rent expense Utilities expense Interest expense
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Exercise 1-18
Assets Liabilities Owners Equity
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Objective 4
Analyze business transactions
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Transaction
An event that affects the financial position of a particular entity and can be recorded reliably
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Transacciones
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Met with a possible client, who will pay him $1,200 for services rendered if contracted.
No
Receive $250 bill from Daily New for ad that will be paid later.
Yes Provides $3,500 of programming services for customers receiving $1,500 in cash and the balance of $2,000 is billed on account. Yes No
Exercise 1-17
a. Increased assets (cash)
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Exercise 1-17
e. Increased assets (accounts receivable)
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Exercise 1-22
Date
July Cash
Assets
Medical Supplies Land
45,000
45,000 Investment
Assets = $45,000
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Exercise 1-22
Date
July Cash
Assets
Medical Supplies Land
6 9 Bal
Assets = $45,000
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Exercise 1-22
Date
July Cash
Assets
Medical Supplies Land
Bal
10,000
35,000
45,000
12
Bal
2,000
10,000 2,000 35,000
2,000
2,000 45,000
Assets = $47,000
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Exercise 1-22
Date
July Cash
Assets
Medical Supplies Land
Bal
15-31
2,000 2,000
Bal
Assets = $54,000
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Exercise 1-22
Date
July Cash
Assets
Medical Supplies Land
Bal
2,000
52,000 -1,700 Salaries Exp -1,000 Rent Exp - 300 Utilities Exp
15-31 -1,700
2,000
49,000
Exercise 1-22
Date
July Cash
Assets
Medical Supplies Land
Bal
2,000 2,000
49,000 49,000
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Bal
Assets = $51,000
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Exercise 1-22
Date
July Cash
Assets
Medical Supplies Land
Bal
49,000 49,000
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Bal
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Objective 5
Prepare financial statements
Objective 6
Evaluate business performance
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Financial Statements
Income statement Statement of owners equity Balance sheet Statement of cash flows
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Income Statement
Summary of an entitys revenues, expenses, and net income or net loss for a specific period Revenues - Expenses Net Income: Revenues > Expenses Net Loss: Expenses > Revenues
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Balance Sheet
Reports the entitys assets, liabilities, and owners equity as of a specific date Assets = Liabilities + Owners Equity
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Maria Lange, M.D. Income Statement For the Month Ended July 31, 2006
Revenue: Fees earned Expenses: Salary expense Rent expense Utilities expense Total Expenses Net income $7,000 $1,700 1,000 300
3,000 $4,000
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Maria Lange, M.D. Statement of Owners Equity For the Month Ended July 31, 2006
Maria Lange, capital, July 1, 2006 Add: Investment by owner Net income for the month Subtotal Less: Withdrawals by owner Maria Lange, capital, July 31, 2006 $ 0 45,000 4,000 $49,000 0 $49,000
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$500
49,000
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Exercise 1-24
Allen Samuel Road Service Balance Sheet November 30, 2009 Assets Cash Accounts receivable Supplies Equipment $2,000 6,000 500 15,500 Liabilities Accounts payable $3,500
Note payable
Total liabilities Owners Equity
5,000
$8,500
A. Samuel, capital
Total Assets $24,000
15,500
Exercise 1-26
Ciliotta Design Studio Income Statement Year Ended December 31, 2006 Service revenue Expenses: Salary expense Rent expense Utilities expense $60,000 24,000 6,800 $158,100
4,000 1,200
96,000
$62,100
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Exercise 1-26
2. Owners withdrawals: Ciliottas, capital, beginning of year Add: Net income Investment by owner Subtotal Less: Owner withdrawal Ciliotta, capital, end of year
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End of Chapter 1
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