Accounting Notes

Accounting Notes - 1 Proprietorship One person… small...

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Jan. 21, 2010 Chapter 1 Who uses Accounting Data? Internal Users: Management Human Resources Finance—looks at the resources of the company to be financed Marketing—what is the cost to make something External Users: IRS Investors—look at financial information Labor Unions Creditors SEC Customers Building Blocks of Accounting There are four main Financial Statements: 1. Balance Sheet 2. Income Statement 3. Retained Earnings Statement 4. Statement of Cash flows GAAP—Generally accepted Accounting Principles People that find the accepted principles Securities and Exchange Commission FASB I… Cost Principle—Report your transaction at cost when the event occurs (assume all transactions are recorded at cost) Monetary unit Assumption—see power point; transactions do not include when you hire someone… just when they get paid Economic Entity Assumption—see power point; separation of the assets of the different entities Three types of Buisiness Ownership
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Unformatted text preview: 1. Proprietorship One person… small service… owner receives all profit 2. Partnership Owned by two or more people… retail/service type… mainly: generally unlimited liability (both partners are liable for the actions of the other)… must have a legal partnership agreement 3. Corporation Must file paperwork and register your corporation… benefit is that it’s a separate legal entity (if corp. sued, stockholders are not liable for debt) Know advantages and disadvantages of all three The Basic Accounting Equation (see powerpoint) Assets = Liabilities + Stockholders’ Equity Assets—the resources that a business owns (what they own or have the right to own in the future; provides current and future benefit to the organization) Liabilities—claims against assets; creditors are the people to whom you owe money Stockholders’ Equity—personal money you put into the business (paid in capitol)...
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Accounting Notes - 1 Proprietorship One person… small...

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