Lecture_1_FA1_spring_2011_black - ACCT 615 Learning Points...

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NJIT_ACCT615_WX_LECTURE 1 1 1 NJIT_ACCT615_WX Lectures 1 Fundamentals of Financial Accounting (1) ACCT 615 NJIT_ACCT615_WX 2 1. Accounting & Accounting Standards – GAAP 2. Accounting Terms & Accounting Equation 3. Financial Reporting ( Annual Report ) Learning Points 3 NJIT_ACCT615_WX Point (1) Accounting & Accounting Standards (GAAP: Generally Accepted Accounting Principles) NJIT_ACCT615_WX 4 An information system identifies, measures and communicates financial information about economic entities to interested users (Who’s interested? …) ____________________________________ ____________________________________ What is Accounting ? NJIT_ACCT615_WX 5 Internal Users ( ? ) External Users ( ? ) Financial vs. Managerial Financial Accounting (Annual & Quarterly Reports) Managerial Accounting (Internal Reports) Satisfied by Satisfied by All of them need accounting information to aid-in decision making NJIT_ACCT615_WX 6 Primary forms of business organization Proprietorship Partnership Corporation Forms of Business Organization An entity separate and distinct from its owners. Owner Manager Illustrate Fin. Acct. Process
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NJIT_ACCT615_WX_LECTURE 1 2 NJIT_ACCT615_WX 7 Financial accounting information must be recorded & presented in conformity with GAAP ( G enerally A ccepted A ccounting P rinciples), which are authoritative guidelines that define accounting practices. Accounting Standards NJIT_ACCT615_WX 8 WHAT is Meant by GAAP? The principles are “ generally accepted ”: 1. Principles established by an authoritative rule-making body *; or 2. General acceptance over time of acctg. practices that have received widespread application. 9 NJIT_ACCT615_WX Point (2) Basic Accounting Terms & Accounting Equation NJIT_ACCT615_WX 10 What are assets ? Assets are financial resources “owned” by a business and have future benefits to the business. Examples of Assets: Cash Inventory _______________________________ Supplies _________________________________ Long-lived assets : land, buildings, machinery, furniture… Property, Plant & Equipment (PPE) Accounts Receivable ** ___________________________________ Copyright, Patent… Basic Accounting Terms They are either convertible to cash or “consumable” NJIT_ACCT615_WX 11 Assets = Claims (Rights) against Assets The Accounting Equation NJIT_ACCT615_WX 12 Assets = Liabilities Owner’s Equity + The claims of creditors The ( residual ) claims of owners The Accounting Equation MUST Always Balance !! The Accounting Equation Note: Claims of creditors must be satisfied before owners .
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NJIT_ACCT615_WX_LECTURE 1 3 NJIT_ACCT615_WX 13 Liabilities are debts & obligations of the business (whatever the business “ owes ”); they represent creditors’ claims on business’ assets Examples of Liabilities: All kinds of “payables” Notes* Payable ( A "note” is a written promise) Accounts Payable (oral promise to pay after purchase) Interests Payable Sales Tax payable … … What are liabilities ? Basic Accounting Terms A.
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This note was uploaded on 03/18/2011 for the course ACCT 601 taught by Professor O'connel during the Spring '10 term at New York Institute of Technology-Westbury.

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Lecture_1_FA1_spring_2011_black - ACCT 615 Learning Points...

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