Course Hero Logo

Accounting Notes.docx - Accounting Notes Chapter 1...

Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. This preview shows page 1 - 5 out of 17 pages.

Accounting NotesChapter 1 – Accounting in actionForm of Business ownershipProprietorshipGenerally owned by one person.Often small service type businessOwner receives any profits, suffers and losses, and is personally liable for all debts.PartnershipOwned by two or more people.Often retail and service-type businesses.Generally unlimited personal liabilityPartnership agreement. (not required) CorporationOwnership divided into shares of stock.Separate legal entity organized under state corporation lawLimited liabilityUsers and uses of financial information, Internal Users – Inside the companyMarketing: What price should apple charge for an iPod to maximize the company net income?Finance:Is cash sufficient to play dividends to Microsoft stockholders?Human Resources: Can General Motors afford to give its employees pay raises this year?
Management: Which PepsiCo Product line is the most profitable? Should any product lines be estimated? External Users - Outside the companyInvestors:Is General Electric earning satisfactory incomeCreditors:Will United Airlines be able to pay its debts as they come due?Investors:How Disney compare in size and profitability with Time WarnerAccounting Activities1) Identification: Select economic events2) Recording: Record, Classify, and summarize3) Communication: Prepare accounting reportsThe Basic Accounting EquationAssets = Liabilities + Stockholders’ equityAssetsResources a business OWNS.Gives us the rightto receive cash in the future.Provide future services or benefits.Cash, Supplies, Equipment, etc.LiabilitiesAmounts we OWE to other (debts and obligations).Accounts payable, notes payableEquityOwnership claim on total assets.2
Referred to as residual equity.Two Accounts:Common stockRetained earningsRevenues: Result from normal business (sale of product; performance of service).Investments of stock: Result from the sale of stock, which means that someone gave us ( the business) cash in exchange Expenses:are the cost of doing businessDividends:are the payments of cash or other assets to stockholders.Transactions:Are a business events which are recorded.9/11/2017 Chapter 2AccountRecord of increases and decreases in a specific asset, liability, equity, revenue, or expense item.Debit = “Left”Credit= “Right”An account can be illustrated in a T-Account form.Every account has two sides, A debit side and a credit side3
Each account has only One balance, either a debit balance or a credit balance, but not both!If debits are greater than credits, the account will have a debit balance.

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 17 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Fall
Professor
Cron

Newly uploaded documents

Show More

Newly uploaded documents

Show More

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture