Test.1 - CHAPTER 1 Accounting is the process of identifying...

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CHAPTER 1 Accounting is the process of identifying, recording, summarizing and reporting economic information for decision makers (represented in financial statements) Accounting info is useful to: managers, owners, investors, politicians Financial accounting serves external decision makers (i.e. stockholders, banks, gov. agencies) Management accounting serves internal (i.e. top executives, dept. heads, college deans) Major financial statements: (1) balance sheet, (2) income statement, (3) statement of cash flows Assets (i.e. Cash, inventories, equipment, accounts receivable) Liabilities (i.e. accounts payable, note payable) Owners’ equity (i.e. paid-in capital, retained earnings, capital stock) Par value (or stated value) the dollar amount printed on stock certificate Auditors examine and validate the info that managers use to prepare financial statements CPA = Certified Public Accountant CEO = Chief Executive Officer Public accountants serve general public for fee Private accountants serve business, gov. agencies, nonprofit organizations GAAP = Generally Accepted Accounting Principles (broad concepts & detailed practices of preparing and distributing financial statements) IASB = International Accounting Standards (producing & enforcing global accounting standards) AICPA = American Institute of Certified Public Accountants (regulates quality of public acct) GAAS = Generally Accepted Auditing Standards Sarbanes-Oxley Act was established by the Public Company Accounting Oversight Board to regulate public accountings and to set standards for auditing GASB = Governmental Accounting Standards Board regulates disclosures for gov. organizations
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FASB = Financial Accounting Standards Board regulates financial reporting for other nonprofit organizations; establishing GAAP in U.S. by issuing FASB statements SEC = Securities & Exchange Commission responsible for authorizing GAAP for public stock CHAPTER 2 Operating Cycle o Starting cash ($100,000) Buys merchandise o Sells merchandise ($160,000) Accounts receivable o Collects cash ($160,000) cycle begins again 60% use calendar year, 40% use fiscal year Revenues are the amount of assets received in exchange for the delivery of goods or
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