B Chapter 2 - CL LTL OE[Par value of stock additional...

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B Chapter 2 Basic Accounting Concepts: The Balance Sheet Concepts used in book: Money Measurement Entity Going Concern Cost Dual Aspect: Every transaction has at  least two parts (Db. And Cr.) Accounting Period Conservatism Realization Matching Consistency Materiality Balance Sheet Example-P. 32
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Resources and Claims View : A=L+SE Sources and Uses of Funds View : A are how funds are used L and SE are fund sources Assets : economic resources that are  controlled by an entity and whose cost (of  fair value) at the time of acquisition could  be objectively measured  Key points of this definition are : Acquired in a transaction
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Must be and economic resource Must be controlled by entity Cost or (FMV) at time of acquisition  must be objectively measurable CA PPE Intangible Assets Liabilities : obligations to transfer assets or  provide services to outside parties arising  from events that have already happened
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Unformatted text preview: CL LTL OE [Par value of stock, additional paid-in-capital, RE) Current ratio Problem 2:2-Preparation of balance sheet. The Note payable is a liability, but would you classify it as a current liability or long-term liability? 2:3-Identify which specific account would be affected, and by what amount (positive or negative affect)? Did the account in question increase or decrease? Case 2:1-Ask yourself, which accounts have changed significantly? Has liabilities increased as a proportion of total assets from June 1 to June 30? As a going concern, the value may very well be more than the value of the individual items minus liabilities. If you take the June income * 12 months and capitalize it at 10 times earnings (multiply the June income * 12 months and then multiply this by 10), the value would be > $2M....
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