business exam 14

business exam 14 - Chapter 14 - Accounting Accounting is...

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Chapter 14 - Accounting Accounting is the recording, classifying, summarizing, analyzing, interpreting, & presenting financial events & transactions to provide management & decision makers the accurate information needed to make good decisions. Financial Accounting - information for users outside the company (shareholders, government statements …balance sheet, income statement, statement of cash flows ). Managerial Accounting - information for users inside the company (management) for their analysis & use in making decisions. Auditing - the job of reviewing & evaluating the financial/accounting records used to prepare the financial statements. 6 Steps in the Accounting Cycle - analyze source documents (sales slips, purchase orders), record the transactions in a journal (book of original/first entry/recording), transfer/post journal entries to the ledger (specific accounts), make a trial balance (check to see if “everything adds up correctly”), prepare financial statements, analyze them Balance Sheet - financial statement that reports the company’s financial condition at a specific date/time. Note specific accounts that are included. Fundamental Accounting Equation Assets = Liabilities + Owners Equity Terminology: assets, liquidity, current assets (cash, accounts receivable, notes receivable, inventory), fixed assets (land, buildings/plant, equipment, furniture), intangible assets (patents, copyrights, goodwill), liabilities, current liabilities (accounts payable, notes payable, accrued expenses - taxes, salaries), long term liabilities (notes, bonds), shareholders/stockholders equity (common stock, preferred stock, retained earnings). Income Statement - financial statement that reports the company’s profit (loss) after costs, expenses, & taxes. Terminology: revenue/sales, sales returns & allowances, discounts, cost-of- goods-sold (COGS), gross profit margin, operating expenses, operating margin, earnings before interest & taxes (EBIT), interest expense, earnings before taxes (EBT), taxes, net income/profit/earnings, net profit margin, earnings per share.
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This note was uploaded on 04/04/2008 for the course BUS 1750 taught by Professor Reck during the Spring '07 term at Western Michigan.

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business exam 14 - Chapter 14 - Accounting Accounting is...

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