Final Notes Sheet.docx - 1 Income statement(companies rev...

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1. Income statement (companies rev and expenses over interval of time. If rev>Exp = net income. If Rev<exp, then net loss). 2. Statement of retained earnings AKA statement of stockholders equity (common stock [external] + retained earnings [internal]). 3. position of the company on a particular date: resources/assets = claims to resources/assets…this means it balances, both equal the same amount) 4. Statements of cashflow (measures activities involving cash receipts and cash payments over an interval of time…3 categories: operating cash flows, investing cash flows, financing cash flows) GAAP: generally accepted accounting principles Standards for presenting financial accounting information….US has FASB-Financial accounting standards board governed by securities and exchange commission (SEC). Global- international account standards board (IASB) Collusion : 2 or more people acting together to circumvent internal controls - Enron/WordCom resulted in Sarbaue-Oxley Act of 2002-aka Publim Company accounting reform and investor protection act. Applies to all companies with SEC. Guidelines related in internal control and auditor-client relations. Cooking the books- Purposely providing misleading financial information to investors and creditors. - Trial Balance : is a list of all accounts and their balances at a particular date, showing that total debits equal total credits. Another purpose is to assist us in preparing adjusting entries for internal transactions. Used internally only. Not published externally and not required to follow an order of listing. - Prepaid expenses: These payments are recorded as assets at the time of needed to (1) decrease the assets balance to its remaining (unused) amount and (2) recognize an expense for the cost of asset used. - Accrued Revenues: Occur when a company provides products or services but hasn’t yet received cash. Because the company has provided products and services in the current period and has the right to receive payment, an adjusting entry is needed to (1) record an asset for the amount expected to be received and (2) recognize revenue. - Adjusting entries are unnecessary in 2 cases- (1) transactions that do not involve rev or exp activities (2) transactions that result in rev or exp being recorded at the same time as the cash flow.

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