9.9.10 Handout Ch. 2

9.9.10 Handout Ch. 2 - ACC 212 Kevin McCauley September 9,...

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ACC 212 Kevin McCauley September 9, 2010 Chapter 2 : Corporate Financial Statements Three major forms of business entities Sole proprietorship – is a business owned by one person Partnership – a business that is formed when two or more proprietors join together to own a business Corporation – is a separate legal entity that is established by filing articles of incorporation in a state. Public corporation – A separate legal entity in which ownership is available to the public at large. Generally Accepted Accounting Principles (GAAP ): The accounting standards, rules, principles, and procedures that comprise authoritative practice for financial accounting. Organizations that assist with establishing GAAP Securities and Exchange Commission (SEC) – Federal agency, enforces GAAP Financial Accounting Standards Board (FASB) – Standard setting body (Board), sets the major accounting standards American Institute of Certified Public Accountants (AICPA) – govern CPA’s Classified Balance Sheet (Statement of financial position) Assets = liabilities + owner’s equity (equation must always balance) A classified balance sheet groups together accounts of similar nature and reports them in a few major classifications Assets o Current (1 year or less) – any asset that is reasonably expected to be converted to cash or consumed within one year 1
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9.9.10 Handout Ch. 2 - ACC 212 Kevin McCauley September 9,...

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