ACCTCh1and2Notes

ACCTCh1and2Notes - EXAM1NOTES Tuesday, September 9, 2008...

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EXAM 1 NOTES 19:18 Tuesday, September 9, 2008 Bucky’s email “ajoh133@lsu.edu” Accounting Notes Chapter 1: Organizations AICPA: American Institute of Certified Public Accountants -Governing Body FASB: Financial Accounting Standards Board -Responsible for issuance of accounting standards -“Accounting standards overload” In 12/77 there were 16 Statements of Financial Standards -Now, there are 145. SEC: Securities and Exchange Commission Oversee stock exchanges Requires member companies to submit financial statements IRS: Internal Revenue Service Income Tax Returns Estate Tax Return Excuse Tax Returns Employment Chapter 2: Intro to Financial Statements & the Underlying Theory
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Historical Cost Principle Assets must be reported and recorded at their historical (original) cost Cost is objective and can be verifiable . Current market value is subjective and not verifiable . Stable Dollar Assumption US Dollar is relatively stable in value; we ignore inflation! US Dollar is our unit of measure Materiality Significance Quantitative Aspect: Relative size of dollar amount Relative importance of the item; example: employee strike Entity Concept Business unit is separate and distinct from other business units and from owner Going Concern Assumption We assume all entities we account for are expected to have indefinite lives. A company expected to be profitable over long-term. Accrual Basis Report revenue when earned regardless of when the cash is received. Six month construction contract This is a true picture of how much money is made Revenue is considered earned whenever the service is completed or when goods are delivered
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Apply same accounting method from year to year Conservatism When in doubt, choose the alternative that is least likely to overstate assets and profits . Financial Statements Income Statement We want to know how successful the company was during the period Tells about revenues Tells about costs we incurred to generate the revenue (expenses). Heading:
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This note was uploaded on 01/11/2009 for the course ACCT 2000 taught by Professor Holmes during the Fall '08 term at LSU.

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ACCTCh1and2Notes - EXAM1NOTES Tuesday, September 9, 2008...

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