ALL NOTES

ALL NOTES - TEST ONE Thursday, January 20, 2005 • Fields...

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Unformatted text preview: TEST ONE Thursday, January 20, 2005 • Fields of Accounting o Financial Accounting Focus is on External financial reporting • Balance Sheet • Income Statement • Statement of Retained Earnings • Statement of Cash Flows Creditor • Anyone whom you owe money Government • SEC (Securities and Exchange Commission) • IRS Investors o Managerial Accounting Focus is on Internal reporting • Seeing what you can do to make a particular entity better. o Taxation TAXES: Income, Sales, Property, Excise, Use, Estate o Auditing CPA Firm Audits • External - No affiliation with the company • Internal – • CIA Exam o Non – Profit Accounting Charities Governments • Financial Accounting o Definition: The process of identifying, gathering, and measuring relevant economic information about a business entity to enhance the decision making process. o GAAP- Generally Accepted Accounting Principles Set of rules and procedures that we have to understand to properly … o Entity Concept The business organization should be treated separate from its owners and other business. o Decision Usefulness o Book Keeping is less than Financial Accounting. o Organizations that impact financial accounting FASB -- Financial Accounting Standards Board • Issue New GAAP IRS – Internal Revenue Service SEC APB – Accounting Principles Board AICPA – American Institute of Certified Public Accountants • Governing Body • CPA Exam CPE (Education) Tuesday, January 25, 2005 • Underlying Theory o Foundation for GAAP (Pg. 43) Going Concern • The accounting entity will have an indefinite life; Operate into the foreseeable future; The Company will be profitable over the long run. Cost Principle • Assets must be reported (Balance Sheet) at their original cost. • Cost is objective and verifiable. (2 or more CPAs will determine the same cost!) vs. current value (too subjective) Consistency • The use of the same accounting methods from year to year. Full Disclosure • “Notes” to the financial statement (Parenthetically, Notes, Anything that might affect the user’s decision making process needs to be disclosed) Materiality (Significance) • Quantitative o Relative Dollar Size • Qualitative o Relative Importance Conservatism • When in doubt about how to account about something select the accounting alternative that is least likely to overstate assets and profits Monetary Unit • The US dollar is our unit of measure in financial statements Stable Dollar • Inflation is ignored!...
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This note was uploaded on 04/25/2008 for the course C 002 taught by Professor Staff during the Fall '04 term at NYU.

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ALL NOTES - TEST ONE Thursday, January 20, 2005 • Fields...

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