Handout_01_(APSCW_-_F2009)

Handout_01_(APSCW_-_F2009) - FINANCIALACCOUNTING...

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BUSI W3013 Handout 01 | Page 1 F INANCIAL A CCOUNTING BUSI W3013 | F ALL 2009 H ANDOUT 01 PROFESSOR ANDREW SCHMIDT 1.0 Introduction ……………………………………………………………………………… 1 2.0 Conceptual Framework ……………………………………………………………………………… 3 3.0 Financial Accounting Reports ……………………………………………………………………………… 22 4.0 Problem Set 01 ……………………………………………………………………………… 28 H ANDOUT O BJECTIVES : I NTRODUCTION AND A CCOUNTING C ONCEPTS 1) Understand the primary objective of financial reporting 2) Identify the qualitative characteristics of accounting information and explain the trade-off between the two primary qualities 3) Identify the basic elements of financial statements and understand the relationships between groups of elements 4) Name the four primary financial statements and describe how the general format of each statement helps users analyze accounting information 5) Describe the basic assumptions of accounting 6) Understand the three principles underlying accrual accounting and how these principles affect the timing and amount of income recognition. 1.0. I NTRODUCTION 1.1. What is Accounting? Accounting is the process of identifying, measuring, recording and communicating economic events in value terms in order to provide information for decision-making purposes. Financial accounting is concerned with providing information for decision-makers primarily outside the firm. Managerial accounting is concerned with providing information for decision-makers inside the firm. To effectively analyze and use accounting information, one must consider the business context in which it is created. All companies plan business activities, finance those activities, invest in those activities, and then engage in operating activities. Firms conduct all of these activities while facing business forces including market constraints and competitive pressures.
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BUSI W3013 Handout 01 | Page 2 1.2. Business Activities Operating – purchasing merchandise (raw materials in manufacturing firms), producing the products (in manufacturing firms), marketing the products, and administrating the operations. Investing acquiring and selling (1) tangible long-lived assets (land, buildings and equipment), (2) intangible assets (patents, licenses and other contractual rights), and (3) investment assets (assets that are not used in operations such as securities issued by other firms). 1 Financing obtaining funds from owners and creditors and providing them with a return on and a return of their investment. 2
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This note was uploaded on 02/27/2011 for the course BUSINESS 101 taught by Professor S during the Spring '10 term at Columbia College.

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Handout_01_(APSCW_-_F2009) - FINANCIALACCOUNTING...

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