BB-Chapter 1-2 Conceptual Framework

BB-Chapter 1-2 Conceptual Framework - *This document from...

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**This document from the authors of your textbook (refer to syllabus for full reference) provides a nice summary of the key material in Chapters 1 & 2. The concepts in these two chapters are fundamental to understanding Financial Accounting. Conceptual Framework Outline for Chapters 1 and 2 We gratefully acknowledge Linda Bell of William Jewell who developed the original version of this outline. Conceptual Framework Outline for Chapters 1 and 2 Survey of Accounting External Financial Statement Users Primarily Investors (Owners) and Creditors U.S. Accounting Rule-Makers FASB - F inancial A ccounting S tandards B oard (7 members, privately funded) issues GAAP—G enerally A ccepted A ccounting P rinciples SEC - S ecurities and E xchange C ommission has federal government authority to set accounting rules for publicly traded companies. For the most part, the SEC allows FASB to set accounting rules, with SEC oversight. The SEC, therefore, influences FASB decisions and, at times, creates its own rules when it disagrees with FASB. Financial Statement Elements 1. Asset Definition: Economic resource a business uses (or will continue to use) to generate revenue. Examples: Cash, Investments, Receivables, Merchandise Inventory, Supplies, Land, Equipment, Machines, Vehicles, Buildings, Prepaid Expenses On Balance Sheet, reported at a point in time (end of accounting period).
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2. Liability Definition: Obligations of a business to creditors to relinquish assets, provide
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BB-Chapter 1-2 Conceptual Framework - *This document from...

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