Acct 101 Chap 1

Acct 101 Chap 1 - Acct 101 Chapter 1 Financial statements...

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Acct 101 – Chapter 1 Financial statements are prepared by company managers. The role of auditors is to give opinions on the fairness of financial statements. The balance sheet lists assets, liabilities, and equity. The fundamental accounting equation: Assets = Liabilities + Equity The income statement shows Revenues, Expenses, and Net Income The statement of changes of shareholders’ equity shows beginning equity, income, dividends, other changes to equity, and ending equity. The cash flow statement shows changes to cash during the year, classified into operating cash flows, investing cash flows, and financing cash flows. The balance sheet, income statement, and statement of shareholders’ equity are all prepared on the accrual basis. The cash flow statement is prepared on the cash basis. Key issues in preparing financial statements are when to recognize items and how to measure them. Asset source transactions or events are those that increase total assets. Examples:
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This note was uploaded on 03/31/2011 for the course ACCT 101 taught by Professor Wang during the Spring '11 term at Adelphi.

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Acct 101 Chap 1 - Acct 101 Chapter 1 Financial statements...

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