Debbie's Comments on Chapter 1

Debbie's Comments on Chapter 1 - Debbies Comments on...

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Debbie’s Comments on Chapter 1 WOW!!!! Chapter 1 is like trying to sip water from a fire hose! There are a lot of new terms and concepts introduced in this beginning chapter – but don’t get scared! We’ll continue to build on these concepts and terms throughout the semester. Some of you may have taken accounting classes before and know that the terms ‘debit’ and ‘credit’ are part of the accounting lingo. However, in this class we will learn about accounting without having to focus on these two terms. Instead, we’ll focus on the accounting equation and how it changes as transactions are recorded. We want to spend more time understanding financial statements and what they can tell us. Even if you don’t plan to major in Accounting, you’ll want to be able to read and understand financial statement information. You’ll want to know if your company is going to be able to pay your salary – or if your company looks financially shaky and you need to start looking for a new job! You’ll want to invest your hard-earned money in companies that provide the greatest return on your investment. You may be in a management position and will want to decide which vendors look like they will be around long enough to fulfill their contractual obligations – or which customers look like they can pay for their purchases. Financial statements can provide information that will help answer these questions. For that reason, our class focuses on financial statements, their contents, and how they link together. Some important things to remember as you read Chapter 1: Your text shows negative numbers in parentheses. For example, a decrease of $100 would be shown as ($100) in your text. The accounting equation: ASSETS = CLAIMS ASSETS = things the company OWNS CLAIMS = Liabilities and shareholders’ equity LIABILITIES = organizations or people the company OWES SHAREHOLDERS’ EQUITY = STOCK + RETAINED EARNINGS STOCK = money that others have invested in the company
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This note was uploaded on 12/01/2010 for the course BISM 165871 taught by Professor Hannah during the Spring '10 term at Kentucky State University.

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Debbie's Comments on Chapter 1 - Debbies Comments on...

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