21 - Outsiders claims to assets Include debts payable to creditors • Examples Accounts payable – liability for goods or services purchased on

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Learn accounting concepts and principles G A A P GAAP is an acronym for G enerally A ccepted A ccounting P rinciples U.S. GAAP is formulated by the Financial Accounting Standards Board (FASB) FASB’s Conceptual Framework states that accounting should be: Relevant Reliable Comparable Consistent Accounting Concepts Entity A business is separate from its owners Reliability Accounting is based on objective evidence Cost Assets are recorded at cost (not fair value) Going-Concern Business will continue indefinitely Monetary Unit Transactions are recorded in a stable currency ($) Concept Violated? Kathy Jones owns a coffee shop. Her personal expenses are included in the accounting records. Assets Economic resources that provide a future benefit Examples: Cash Inventory Equipment Land Buildings Liabilities
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Outsiders claims to assets Include debts payable to creditors • Examples: Accounts payable – liability for goods or services purchased on credit Notes payable – written promise to pay on a certain date (bank loan) Owners’ Equity • Owners’ claim on a business • Assets minus liabilities What’s left after debts are paid • A corporation’s equity is called stockholders’ equity Accounting Equation Example • Compute the missing amount from each situation on the following slide • Remember: Assets = Liabilities + Owners’ Equity Shareholders’ Equity • Paid-in capital • Amounts invested by stockholders • Common stock • Retained Earnings • Amounts earned and kept for use in the company • Increased by Revenues • Decreased by Expenses...
View Full Document

This note was uploaded on 06/14/2011 for the course ACCOUNTING 23020 taught by Professor Na during the Spring '11 term at Kent State.

Page1 / 2

21 - Outsiders claims to assets Include debts payable to creditors • Examples Accounts payable – liability for goods or services purchased on

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online