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ACTG 500 Handout 3 Transaction analysis continued

ACTG 500 Handout 3 Transaction analysis continued -...

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1 ACTG 500 Introduction to Financial Accounting Fall 2009 UIC College of Business Administration The Operating Cycle ACTG 500 3-2
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2 Operating Cycle to Financial Accounting Assets Resources required to generate revenues Long-term (Non-current) Property, plant and equipment (PP&E) Long-term investments Intangible assets (e.g., patents, copyrights, goodwill) Short-term (Current): Gross working capital Cash Inventories Accounts receivable Prepaid expenses ACTG 500 3-3 Operating Cycle to Financial Accounting Liabilities Funds contributed by outsiders Long-term (Non-current) Public debt (e.g., bonds, notes, bank loans) Private debt Short-term (Current) Accounts payable (trade credit from suppliers) Accrued liabilities (e.g., interest payable, rent payable, salaries/wages payable) Unearned revenues Current maturities of long-term debt Net working capital (NWC) Current assets – Current liabilities ACTG 500 3-4
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3 Operating Cycle to Financial Accounting Shareholders’ Equity Funds contributed by (and belonging to) owners of the firm Contributed capital Common and preferred stock Additional paid-in capital Earned capital Retained earnings Other accounts Treasury stock Accumulated other comprehensive income (AOCI or OCI) ACTG 500 3-5 The Accounting Cycle ACTG 500 3-6
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4 T-Accounts and Journal Entries ACTG 500 3-7 Asset (Inventory) Transaction ACTG 500 3-8
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