chapter 1_Notes - Financial Accounting Chapter 1 financial...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Financial Accounting Chapter 1 – financial statements and business decisions Understanding the Business Founders sometimes function as owner-managers Accounting – is a system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that info to decision makers The Four Basic Financial Statements Financial statements for investors and creditors at end of each quarter are quarterly reports Financial statements issued at end of year is known as annual reports Balance sheet Balance sheet – statement of financial position. Reports the amount of assets, liabilities, and stockholders’ equity of an accounting entity at a point in time Assets = liabilities + shareholders’ equity Accounting entity – is the organization for which financial data are to be collected Financial reports generally in currency of country Assets are economic resources owned by the entity Liabilities and shareholders’ equity are source of financing or claims against company’s economic resources including financing from creditors Basic accounting equation (balance sheet equation) - assets = liabilities +shareholders’ equity Financial position – economic resources that the company owns and the sources of financing for those resources Every asset is initially measured at total cost incurred to acquire it. ; Liabilities are companies debts or obligations Accounts payable arise from purchase of goods or services from suppliers on credit without a formal contract Stockholders’ equity indicates amount of financing provided by owners of
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/20/2009 for the course AEM 221 taught by Professor Little,j. during the Fall '08 term at Cornell University (Engineering School).

Page1 / 3

chapter 1_Notes - Financial Accounting Chapter 1 financial...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online