acc557_w1 - • Assets – Resources a business owns •...

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Financial Accounting ACC 557 Accounting Principles and Concepts Financial Accounting (6 th ed.).John Wiley & Sons.
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Objectives Upon completion of this lesson, you will be able to: Examine accounting principles and concepts used in businesses
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Nature of Accounting
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Users and Uses of Accounting Internal users Individuals inside the company Managerial accounting External users Individuals outside the company Investors, creditors, regulatory bodies Financial accounting
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Check Your Understanding
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Principles of Accounting GAAP Financial accounting standards board Cost principle Assets are recorded at cost
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Assumptions Monetary unit Companies include in the accounting records only transaction data that can be expressed in terms of money Economic entity The activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities
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Basic Accounting Equation Assets = Liabilities + Stockholders’ Equity
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Unformatted text preview: • Assets – Resources a business owns • Liabilities – Existing debts and obligations • Stockholders’ equity – Ownership claim against assets Stockholders’ Equity Transactions • Definition – A business’s economic events recorded by accountants • Internal and external transactions • Dual effect – Corresponding effect on accounting equation Financial Statements • Income statement – Presents a summary of the revenues and expenses • Retained earnings statement – Summarizes the changes in retained earnings • Balance sheet – Reports assets, liabilities, and stockholders’ equity • Statement of cash flows – Summarizes information concerning the cash inflows and cash outflows Check Your Understanding Summary • Nature of accounting • Users and uses of accounting • GAAP • The cost principle • The accounting equation • Financial statements...
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acc557_w1 - • Assets – Resources a business owns •...

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