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Acc 201 Sample exam review 1 page 1

Acc 201 Sample exam review 1 page 1 - These are extra notes...

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These are extra notes on different principles and the reasoning behind certain problems in the practice tests and extra notes for the course pack. Ch. 1 Owners of the company Sole proprietorship – 1 owner who has complete responsibility (legal entity) business income is taxable Partnership – 2 or more owners (both are legal entity), share of income is taxable Corporation – corporation is legal entity, double taxation Basic Financial Statements (in order): 1. Income Statement 2. Statement of Retained Earnings 3. Balance Sheet 4. Statement of Cash Flows Fairly presented: Financial statements have to be within the guidelines or follow the rules of GAAP (Generally accepted accounting principles) to make sure the information doesn’t mislead users Adequate disclosure: Use footnotes to help guide readers in understanding complex transactions BALANCE SHEET: reports the financial position or is a snapshot, it basically tells where the company is or how much resources, debt, equity they have at any point in time.
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