CHAP 1 - CHAP 1 Accounting:Accumulates financial...

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CHAP 1 Accounting:–Accumulates financial data–Measures financial performance Communicates financial information–Informed decisions can be made FUNTION- Analyze event => determine information captured by A system -keep track-evaluate financial health and performance USERS internal : management budgets. ,Cost analyses, performance report External : Financial Account : Investors , lenders, Employees. : Balance sheet, Income statement Statement of cash flows. Other regulatory report CHAP 2 FINANCIAL STATEMENT Primary financial Statement : Balance sheet . (Statement of financial )•Income Statement (Statement of Earnings) Statement of Cash Flows RETAIN EARNING Beginning retained earnings + Net income – Dividends = Ending retained earnings Operating Activities Day-to-day activities Investing Activities Buying and selling . long-term assets Financing Activities . Cash obtained or repaid to owners or creditors NOTE TO FINANCIAL STATEMENT 1.Summary of significant accounting policies. 2. Additional information about the summary totals found in the financial statements. 3. Disclosure of important information that is not recognized in the financial statements. 4. Supplementary information required by the Financial Accounting Standards Board (FASB) or the Securities and Exchange Commission (SEC). CHAP 3 Analyze transactions . Record the effects of the transactions. Summarize the effects of transactions. 1. Posting journal entries.
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2. Preparing a trial balance. Prepare reports. 1. Adjusting entries. 2. Preparing financial statements 3. Closing the books. •Posting : Transferring amounts from the journal to the ledger . •Ledger : A book of accounts where journal transactions are posted and thereby summarized. •Chart of accounts :A systematic listing of all accounts used by a company. Unrecorded Receivables Earn but not received 12/31/09 Rent Receivable 500 Rent Revenue 500 Thieu but not pay 12/31/09 Property Tax Expense 1,000 Property Tax Payable 1,000 adjust pre pay 12/31/09 Rent Expense 1,800 Prepaid Rent 1,800 Received not work 12/31/09 Unearned Rent 1,800 Rent Revenue 1,800 prepare financial statement Four step process using the trial balance: 1.Identify revenue 2.Compute net income. 3.Compute the ending retained earnings balance.
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4.Prepare a balance sheet using the balance “ending retained earnings balance •Real Accounts . Permanent . Not closed at year end. Balance Sheet accounts. Balances are carried forward to next period. •Nominal Accounts .Temporary . Closed (brought to a zero balance) at year end.– Income Statement accounts and dividends –Balance are NOT carried forward to next period. The Closing Process : Record entries that reduce all nominal acc t a 0 balance Nominal accounts are closed to retained earnings •Step 1: Close all revenue accounts by debiting them. 2: Close all expense
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This note was uploaded on 06/20/2011 for the course ECON 123 taught by Professor Mrews during the Spring '11 term at Korea Advanced Institute of Science and Technology.

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CHAP 1 - CHAP 1 Accounting:Accumulates financial...

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