Accounting review.docx - Accounting review. 1. - Financial...

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Accounting review.1.Financial vs. managerial accounting-Financial is the field of accounting that focuses on providing information for external decision makers(formal) vs. managerial is the field of accounting that focuses on providing information for internal decisionmakers (informal.)2.Generally accepted accounting principle (GAAP):accounting guidelines, currently formulated by thefinancial accounting standards board (FASB); the main us accounting rule book.3.GAAP principle:-Economic entity assumption: an organization that stands apart as a separate economic unit.-The cost principle: states that acquired assets and service should be recorded at their actual cost (alsocalled historical cost.) means we record a transaction at the amount shown on the receipt the actual amount paid.-Going concern assumption:assumes that the entity will remain in operation for the foreseeable.-Monetary unit assumption: the assumption that requires the items on the financial statements to bemeasured in terms of a monetary unit.4.Accounting equation: the basic tool of accounting, measuring the resources of the resources of thebusiness (what the business owns or has control of) and the claims to those resources (what the business owes tocreditors and to the owners). assets = liabilities + equity.-Assets: economic resources that are expected to benefit the business in the future. Something that businessowns or has control of.-Liabilities: debts that are owed to creditors.-Equity: the owner’s claims to the assets of the business.5.Owner contribution account:A capital contribution is a contribution of capital, in the form of money orproperty, to a business by an owner, partner, or shareholder. The contribution increases the owner's equity interestin the business6.On account: can be used to represent either accounts receivable or accounts payables. If the business willbe receiving a cash in the future, the company will record an accounts receivable. If the business will be payingcash in the future, the company will record an accounts payable.7.Accrued expense

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Term
Fall
Professor
callaghan
Tags
Accounting, Business, Managerial Accounting, Generally Accepted Accounting Principles

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