Accounting+-+All+Information

Accounting+-+All+Information - Accounting Overview of Week...

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Unformatted text preview: Accounting Overview of Week • Administrative stuff • What is financial accounting? • Some Myths • Accrual versus Cash-based • Financial statements • GAAP • Auditing Administrative Stuff • Who am I • Who is your T.A. • Teaching philosophy • Syllabus – Homework • Calculator Web Access to Class Info • The site should contain: – Syllabus – PowerPoint slides – Handouts – Homework solutions – http://www.cgu.edu/pages/3472.asp What is Financial Accounting? • A method to communicate financial information to interested external parties. • Users include capital providers, regulators, customers, suppliers, employees, etc • Capital suppliers include debt and equity providers • Financial accounting is used for both prediction and control Accounting is rigid and yields the truth • Generally-accepted accounting principles, or GAAP, are a set of rigid rules that, if followed correctly, will lead to a unique, “correct” representation of the financial performance and health of a firm. • The basic financial statements, consisting of a balance sheet, an income statement, and a statement of cash flows, reflect a complete, accurate, and timely portrayal of the financial performance and well-being of a firm Accounting is the sole product of accountants • GAAP is created from a comprehensive analytical process, which is free from political influence. It is all there • All of a firm’s identifiable assets and liabilities appear on the balance sheet, and the difference between a firm’s assets and its liabilities represents the value of the firm. The statements stand alone • Each of the financial statements is independent, with each reflecting a different aspect of the firm’s performance and financial health. Cash is King! • Cash flow is ultimately what matters to a firm and its investors; therefore, it is not really necessary to worry about the definition of earnings used in the preparation of the income statement. Rather, one need only consider the sources and uses of cash as reflected on the firm’s statement of cash flows. Some additional myths • Accounting is useless. • Accounting is hard! • Accountants are boring. Other Types of Accounting • Managerial • Non-profit • Tax Accrual Accounting Accrual accounting rests on two guiding principles: • Revenue Recognition Principle – record revenue when – Earned – Realized or Realizable • Matching Principle – record expenses when...
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This note was uploaded on 07/29/2010 for the course ACCOUNTS 2332 taught by Professor Piyush during the Fall '10 term at Amity University.

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Accounting+-+All+Information - Accounting Overview of Week...

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