ACC231 - Wk 02 - Student Materials

ACC231 - Wk 02 - Student Materials - ACC231 - Fall 2009...

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Fall 2009 Copyright © School of Accountancy, Arizona State University Week 2 – Page 1 ACC231 - Fall 2009 Week 2 Overview (September 2 - September 7) Material we cover this week Solid Footing Chapters 3 through 6 What are we learning this week? 1. Qualitative Characteristics of Accounting Information 2. Cash versus Accrual Accounting 3. Closing Entries 4. Four Basic Financial Statements Detail of Information you should know: 1. Qualitative Characteristics of Accounting Information a. Purpose (primary objective) of Accounting information b. Assumption about users of Financial information c. Two Primary and Two Secondary Characteristics of Accounting Information d. Constraints 2. Cash versus Accrual Accounting a. Differentiate between these two methods b. Know advantages/disadvantages c. Understand Revenue Recognition Principle 3. Closing Entries a. Identify real versus nominal accounts (also called permanent and temporary accounts) b. Explain why companies prepare closing entries c. Be able to prepare closing journal entries 4. Four Basic Financial Statements a. Know the four basic statements and the sequence of preparation b. Articulation of Financial Statements i. Understand what data from each statement articulates to the other F/S ii. Be able to transfer this data from one statement to the appropriate other F/S c. Understand basic information related to each statement, including i. Point in time versus period of time ii. Cash versus accrual d. Be able to prepare the Income Statement, Statement of R/E and Balance Sheet
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Fall 2009 Copyright © School of Accountancy, Arizona State University Week 2 – Page 2 WEEK 2 - TERMINOLOGY AND CONCEPTS Items are definitional in nature. We may or may not review these items in Mega but you are responsible for knowing this information for homework, quizzes and exams. Sometimes you will see alternate words that mean the same thing. Here is an explanation of these items: Alternate Terminology Property, Plant and Equipment -- this is the name for a grouping of accounts that includes things like equipment, furniture, factory, building, land, etc. These items may also be referred to as "Fixed Assets". Common Stock -- May also be referred to as "Capital Stock". Owners' Equity -- May also be referred to as "Stockholders' Equity" or "Shareholders' Equity". Sales -- These may also be referred to as "Revenues" or "Sales Revenues". You may also see more specific account titles. For example, a law firm may have "Legal Fee Revenue". Cost of Goods Sold -- This is the cost of the inventory we have sold and is sometimes abbreviated as “COGS”. This term is used by companies that sell tangible goods (such as Abercrombie or WalMart). These companies may also refer to it as "Cost of Sales". Service Companies use the term "Cost of Sales" as they are not selling tangible goods.
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ACC231 - Wk 02 - Student Materials - ACC231 - Fall 2009...

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