ACCT410 Notes - ACCT-410 GAAP Generally Accepted Accounting...

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ACCT-410 10/01/2007 18:02:00 GAAP Generally Accepted Accounting Principles FASB currently supervises GAAP o Financial Accounting Standards Board o 7 members of FASB (5 positive votes to generate GAAP) o standards must meet GAAP (present fairly under GAAP) stock options offer stock in company for purchase at a  fixed price  regardless of  market  price  which can then be sold at the  current market price basic financials balance sheet o assets = liabilities + stockholders’ equity (owner’s equity) o examples of assets cash investments property, plant, equipment (e.g. autos, buildings, machinery) accounts receivable when a sale is made with cash to be paid later e.g. credit card purchases
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o expenses research and development examples of liabilities accounts payable opposite of accounts receivable salaries payable taxes payable examples of stockholders’ equity (owner’s equity) invested earned income statement o net income = revenue – expenses if accounts receivable changes, revenue changes cash-flow statement o cash-in = cash-out if accounts receivable changes, cash-in  does not change cash-operations cash-investing cash-financing revenue recognition
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