RSM100 - Accounting II - (Pre-Class Notes) copy

RSM100 - Accounting II - (Pre-Class Notes) copy - RSM100...

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RSM100 Accounting II 1
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Learning Objectives 1. Explain the accounting equation 2. Describe basic principles of financial accounting 3. Understand why companies ‘cook the books’ 4. Analysis of Apple’s Financial Statements 2
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Accounting Equation: An Overview Assets = Liabilities + Equity OR The value of what we own = the money invested in the business (other people’s $ + our $) 3
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Cost Principle Assets or services should initially be recorded at their actual _____________ 4
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Revenue Recognition Revenue should be recorded when it has been _____________ But what does ‘ _____________ ’ mean? How does this differ from the cash basis of accounting? 5
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Matching Principle _____________ should be matched with _____________ – i.e. recognized in the same _____________ that related revenue is recorded 6
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Causes for Differences Between Net income and Cash Flow _____________ items related to accrual basis of accounting _____________
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