ACIS+2115+Chapter+1+Lecture+Fall+2009

ACIS+2115+Chapter+1+Lecture+Fall+2009 - 1 ACIS 2115 Chapter...

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Unformatted text preview: 1 ACIS 2115 Chapter One Business Decisions and Financial Reporting 1-2 Organizational Forms Partnership Owned by two or more people. Each partner is personally liable for all debts of the business. Corporation A separate entity from both a legal and accounting perspective. Owners of corporations (stockholders) are not personally responsible for debts of the corporation. Sole Proprietorship Owned by one person. Owner is personally liable for all debts of the business. 1-3 Organizational Forms Corporations Public Companies Have their stock bought and sold on stock exchanges. Private Companies Have their stock bought and sold privately. 1-4 Accounting for Business Decisions Accounting System Financial Accounting Reports Managerial Accounting Reports External Users Creditors Investors Others Internal Users Managers Produces Provided to ACIS 2115 ACIS 2116 1-5 Learning Objective 2 Describe the purpose, structure, and content of the four basic financial statements. 1-6 The Basic Accounting Equation Resources Owned . . . by the company Resources Owed . . . to creditors to stockholders Separate Entity Assumption Requires that a businesss financial reports include only the activities of the business and not those of its stockholders. 1-7 Assets Resources controlled by the company that have measurable value and are expected to provide future benefits to the company. Cash Supplies Furniture Equipment 1-8 Liabilities Amounts owed by the business to creditors. Notes Payable Accounts Payable 1-9 Stockholders Equity Owners claim to the business resources. Stock Certificate 1-10 Revenues, Expenses and Net Income Revenues Sales of goods or services to customers. They are measured at the amount the business charges the customer. Expenses The costs of business necessary to earn revenues, including wages to employees, advertising, insurance, and utilities. 1-11 Dividends Payments a company periodically makes to its stockholders as a return on their investment. 1-12 Financial Statements Balance Sheet Income Statement Statement of Retained Earnings Statement of Cash Flows 1-13 Hokie Car Wash Suppose that you decide to wash cars in the parking lot of a shopping center. Ten of your friends contribute $25 each to your car wash 1-14 Financial Statement Equations Assets = Liabilities + Owners Equity Balance Sheet: $250 = $250 Cash Contributed Capital 1-15 Hokie Car Wash Suppose you borrow $200 from your parents for your car wash. Assets = Liabilities + Owners Equity Balance Sheet: $450 = $200 $250 Cash Cont. Capital Owed to Parents 1-16 Hokie Car Wash You pay $200 for a table, two chairs and an umbrella that you can set up in the parking lot....
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ACIS+2115+Chapter+1+Lecture+Fall+2009 - 1 ACIS 2115 Chapter...

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