unit 1 Notes - Fundamental Rule = dont run out of cash....

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Fundamental Rule = don’t run out of cash. Accounting is an information system that measures business activities, processes that information into reports, and communicates the results to decision makers Assets = liabilities + equity Primary financial statements; Balance sheet, income sheet, statement of cash flow Tells you: 1. What the company’s cash situation is at any point in time whether surplus or deficit. 2. Plan accordingly to avoid cash shortage The primary financial statements include: The income statement, summarizing revenues and expenses incurred The statement of owner's equity, reporting the changes in owner's equity The balance sheet, listing assets, liabilities, and owner's equity, and The statement of cash flows, reporting cash receipts and cash payments AFN = Additional Funds Needed – difference between projected investment needs (total Assets) and the projected financings (total liabilities and equity) Generally accepted accounting principles (GAAP) are rules that govern how accountants measure, process, and communicate financial information. Live Chat Notes Income statement has revenues and expenses on it Balance Statement – Assets, liabilities and revenues on it Asset is the resource of the company Liability is an obligation for the company (debt) Debit and credit in accounting – how we increase and decrease an account Journal entry: company would debit cash and credit sales, or debit accounts receivable and credit sales. *********Common stock is an example to use on Balance Sheet***************
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Chapter 1 Notes Accounting : process of identifying, measuring, and communicating economic information to permit informed judgments and decisions. The purpose of accounting is to identify, measure, and communicate economic
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This note was uploaded on 04/02/2011 for the course ACCT 205 taught by Professor Wendyw.achilles during the Fall '10 term at American InterContinental University.

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unit 1 Notes - Fundamental Rule = dont run out of cash....

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