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Actg 210 Chapter 1 - Financial statements summarize the...

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Actg 210 Chapter 1 Accounting Activities: 1. Identifying business activities 2. Recording business activities 3. Communicating business activities The Accounting System Financial Accounting System - periodic financial statements and related disclosures External Decision Makers - investors, creditors, suppliers, customers, etc Managerial Accounting System - detailed plans and continous performance reports Internal Decision Makers - managers throughout the organization Financial Statements: Statement of cash flows: Balance Sheet : what the business has at its disposal. What the business has and who has claims to those resources. First thing is company name, then the title, then the date, below it the unit of measure (in thousands of dollars). Statement of Retained Earnings: Income Statement:
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Unformatted text preview: Financial statements summarize the financial activities of the business. All together this will give us a picture of what the firm is doing, whether its profitable, and more. Accounting Equation ASSETS= LIABILITIES + EQUITY-Liabilities represent the claims to those assets. Using Financial Statements: Creditors-Is the company generating enough cash to make payments on its loans?-Does the company have enough assets to cover its liabilities? External Financial Reporting: Main goal: provide useful financial information to external users for decision making In Class Problem #1 Answer: NET SALES $68,520 COST OF GOODS SOLD ($52,567) OPERATING EXPENSES ($12,910) RENTAL INCOME $741 INCOME TAX $1207 INTERST COSTS $241 In class Problem #2:...
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