Prelim2 - Areas of Accounting Financial Accounting - Tax...

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11/13/09 Areas of Accounting Financial Accounting - EXTERNAL - Annual Report - Private/Public Accountant - C.P.A. - provides a means to analyze Tax Accounting assists with tax collection Managerial Accounting - INTERNAL - Inside organization - C.M.A.
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11/13/09 Comparing Financial and Managerial Accounting Financial accounting is Primarily intended to provide information to external stakeholders such as stockholders, creditors, and government regulators; Prepares a standard set of financial statements ; Presents financial statements on a predetermined (usually quarterly or annual) schedule ; Governed by a set of generally Managerial accounting is Primarily intended to provide information to internal stakeholders such as managers of specific divisions or departments; Prepares customized reports designed to deal with specific problems or issues; Creates reports upon request by management rather than according to a predetermined schedule; Uses procedures developed Tools of Managerial Accounting Product Costing Activity based costing; Incremental analysis An evaluation and comparison of the financial impact different alternatives would have in a particular decision making
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Click to edit Master subtitle style 11/13/09 Accounting Equation Total Assets = Total Liabilities + Shareholder’s/Owner’s Equity Owned = Owed + Owner’s Claims If asset value decreases => owner’s equity decreases since liabilities do not decrease Assets Current assets Cash Accounts Receivable Notes Receivable Inventory Fixed assets (long-term) Land Buildings Capital equipment Accumulated Depreciation Liabilities Current liabilities Accounts Payable Notes Payable Accrued Taxes Accrued Salaries Long-term liabilities Notes payable Bonds payable Owner’s Equity Stock shares/ common stock Components of a Typical Balance Sheet
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11/13/09 The “Typical” Income Statement Net Sales (Revenue) - Cost of Goods Sold Gross Profit - Operating Expenses (General expenses & depreciation) Net Profit Before Interest and Taxes (Operating Income) - Interest Pro-forma” accounting A statement of the company's financial activities while excluding unusual and nonrecurring expenses when stating how much money the company actually made. company restructuring costs, decline in the value of the company's investments, adjusting the current balance sheet to fix faulty
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11/13/09 Solvency/Liquidity Ratios Short-Term Long-Term __Current  Assets__ Current  Liabilities -  Quick (Acid Test) Ratio Cash + Marketable Securities + Receivables Current  Liabilities - Current Ratio - Debt to Equity Total  Liabilities  Owner’s Equity =     Current  Assets  – Inventory               Current  Liabilities Profitability Ratios - Return on Sales Net Income (After Taxes) Net Sales - Return on Equity _ Net Income (After Taxes)_ Owner’s Equity - Earnings Per Share __Net Income (After Taxes)__ # Common Stock/Shares
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This note was uploaded on 11/12/2009 for the course AEM 1200 at Cornell University (Engineering School).

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Prelim2 - Areas of Accounting Financial Accounting - Tax...

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