acct notes - ACCT 410 Lecture 1 8/27 Demand for Accounting...

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ACCT 410 Lecture 1: 8/27 Demand for Accounting Information Financial Accounting provides information primarily to people outside the company provides information that would be helpful in attracting capital Equity and debt (useful in debt contracts) Credit from suppliers Customers Employees Managerial Accounting provides information to people inside the company Internal investment decisions Performance evaluation Tax Accounting provides information to the tax authorities Nature of Financial Accounting Useful to those making investment and credit decisions, who have a reasonable understanding of business and economic activities. Helpful to present and potential investors creditors other users in assessing the amount, timing, and uncertainty of future cash flows. Provides information about economic resources, the claims to those resources, and the changes in them. Financial Reporting Requirements Audited Annual Report (10-K) Unaudited Quarterly Reports (10-Q) Current Reports (8-K) within 10 days of the end of a month containing a significant event (e.g., major asset sales, changes in ownership, bankruptcy, changing the auditor) Foreign Companies (20-F) The Annual Report The Management Letter Management discussion on developments during the year and current state of the company The Financial Statements Balance Sheet, Income Statement, Statement of Cash Flows The Auditors’ Report
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The Auditor's Report GAAS (Generally Accepted Auditing Standards) Reasonable assurance that financial statements are free of material misstatement Assess the accounting principles used and significant estimates made by management Actual opinion financial statements present fairly, in all material respects, the financial position, the results of operations, etc. are in conformity with GAAP (Generally Accepted Accounting Principles). Lecture 2: 8/29 Financial Statements The financial information provided by a company is summarized in three financial statements: the balance sheet, the income statement, and statement of cash flow. The balance sheet reports the assets of a company (the use of money), the liabilities (one source of the money), and the owners’ equity (another source of the money) as of a certain date. The income statement reports the amount of net income earned by the company during a period. The statement of cash flows reports the amount of cash collected and paid out by a company during a period. Contain primarily historical Information Balance Sheet Assets= Liabilities + Owners’ equity Income Statement Revenue - Expenses = Net Income Statement of cash flows Operating, Investing and Financing activities Statement of retained earnings Beginning retained earnings + net income – dividend = ending retained earnings Footnotes Significant accounting policies, estimates, etc.
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