module1 - • Income Statement: o Revenue (+) o expenses...

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Accounting(understanding what the numbers mean and take part in business decision making that maximizes company profit) is not book keeping (keeping records organized) Balance Sheet o Assets= Liabilities + Owner’s equity o Asset has to have probable future economic value o Asset has to be controlled o Asset has to be related to a past transaction o Liability has to have probable future economic sacrifice o Liability has to be unavoidable o Liability has to be related to a past transaction (forming a contract is not the same as a transaction) o Owner’s equity is contributed by owners ( sometimes called the net assets)
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Unformatted text preview: • Income Statement: o Revenue (+) o expenses (-) using up resources in obtaining revenue o Net income happens when (+) > (-) o Net Loss happens when (-) > (+) • Statement of Cash Flows: (where the money came from and where the money is spent) o Operating cash flows— normal ops o Investing cash flows— football team o Financing cash flows— borrowed money is a source of cash o +_ debt holders o Transactions with owners • Entity Concept • Historic Cost convention—assets and liabilities usually recorded at original values • Gains and losses are not from normal business whereas revenue and expenses are reoccurring •...
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This note was uploaded on 10/01/2009 for the course BUAD 250A taught by Professor 10:00-10:50 during the Spring '06 term at USC.

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