AC221FinalReviewSheet-2 - Lecture 1 - Intro Corporation...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Lecture 1 - Intro Corporation info outsiders Resources tomorrow vs. resources today Financial accounting: provides info to people outside the company Managerial accounting: provides info to managers inside the company Tax accounting: provides info to the tax authorities/auditing Usefulness measured by: o Informativeness o Independent observability Historical cost: cost at which asset was acquired Conservatism: asymmetry of treatment of gains/losses A = L + OE
Background image of page 1

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

View Full DocumentRight Arrow Icon
Lecture 2 – Recording Transactions B.S. asset valuation: o monetary assets – current cash value o nonmonetary assets – acquisition value liability valuation: o less than 1 year – expected cash payments by firm o more than 1 year – PV of future cash flows debit = left credit = right dual entry bookkeeping T-Accounts: show effect of transaction on accounts Financial Leverage = Avg. Total Assets / Avg. Shareholder’s Eq.
Background image of page 2
Lecture 3 – Recording Transactions I.S. Operating cycle: time it takes company to acquire/pay for goods, sell them to customers, and turn them into Revenue Accounting cycle: divides company’s life into accounting periods Net Income = Revenues – Expenses Accrual Accounting: o Revenue recognized when process is substantially complete, payment sure o Expense recognized when related revenues are recognized Cash Accounting: recognition when cash is paid/received Debits increase: Assets, Expenses Credits increase: Liabilities, Revenues, SE Asset Turnover = Sales / Avg. Total Assets
Background image of page 3

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

View Full DocumentRight Arrow Icon
Lecture 4 – Adjusting Entries Contra-asset: linked to an asset, but has the opposite balance ***Closing entries: o Balance sheet accounts – permanent; not reduced to 0 o Inc. statement accounts – reduced to 0 so they can be re-used next year o Close Dividends to RE Profit Margin = Net Income / Net Sales o How much profit is generated from each dollar of sales? ROA = Net Income / Avg. Total Assets
Background image of page 4
Lecture 5 – Revenue Rec., Receivables, Allowance for Bad Debt BDE – arises from extending credit to customers BDE: an estimation of questionable, uncollectible accounts o Debit BDE, Credit Allowance for Dbt. Accounts Write-offs – person/company will NOT pay debt back o Debit Allowance for Dbt. Accounts, Credit Acc. Receivable NO EFFECT on NI or Total Assets
Background image of page 5

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

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 19

AC221FinalReviewSheet-2 - Lecture 1 - Intro Corporation...

This preview shows document pages 1 - 6. Sign up to view the full document.

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