Accounting Class 1

Accounting Class 1 - Accounting- Recording and reporting...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Accounting- Recording and reporting financial information for decision-making. For Profit Organization—two types of decision making— 1) Internal decision makers—mangers =managerial accounting 2) External decision makers- people outside company= financial accounting 3 types of organizations advantage propiership simple to form simple to operate self profit taxed once at owner level Disadvantage have to get professional liability insurance lack of money…limited ability to obtain capital partnerships Advantage 2 or more people same Disadvantage Same General Partners- Unlimited authority and liability Limited Partners- Authority is limited not allowed to hire or fire usually have limited liablilty (junior new partners) Corporation – purpose is to get rid of disadvantages of above it now has unlimited ability to get money is a separate legal entities. .. faces double taxation now another problem is government oversight this agency is the SEC state gives birth certificate … Resources of business to help them get money = Assets Sources of the resources =Equities Accounting equation …. A = E Owners Equity- contribution by the owner to the business ( propership= capital… Smith Capital, partnership= number of capatial as number of partners….Jones and Smith Capiutal, Corporation= stockholder equity)= CAPITAL Debt Equity- lent to the business = LIABILITY Now… A= L+ C Revenue- money business EARNED …. Owner owns these put position up
Background image of page 1

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

View Full DocumentRight Arrow Icon
Expenses- the bills of the business…. Owner owns these put positions down Now… A=L+C+R-E Withdrawals- Money that business takes out of business If corporation than W is D which is dividends Now …. A=L+C+R-E-W Two basis of accounting- Two Ways to keep the book Cash Basis Accounting Not Gaap Accural Basis Accounting Is Gaap What is Gaap? Generally Accepted Accounting Principles – the rules of accounting FASB- Financial Accounting Standard Board- the rule makers 1-8 A problem is financial Recording Financial Reporting Three reports, three line headings, three paragraphs 1) Income statement is the first report (Headings is three lines , WHO, WHAT, WHEN) ANDERSON ELECTRIC INCOME STATEMENT (made or lost money) 1-31 December ( Period of time… year, month,) REVENUE PARAGRAPH - fees earned 8,600 EXPENSE PARAGRAPH - break down each expense…rent expense- 1,800 so on NET INCOME/ NET LOSS - income 4,730 2) ANDERSON ELECTRIC STATEMENT OF OWNERS CAPITAL/ EQUITY (shows change in owners capital over period of time) 1-31 December Owners Capital 1 Dec (Start )….0 Changes Investment +68,000… Withdraw l -900… Net Gain …4700 Owners Capital 31 Dec (End) 72630
Background image of page 2
3) Balance Sheet ( Show the financial position of the firm at POINT of time) ANDERSON ELECTRIC BALANCE SHEET 31 December ASSESTS - ADD UP ALL LIABILITIES —accounts payable … 8,560 CAPITAL —72630 TOAL- L+C= 81,190 ASSESTS NEEDS TO BE BALANCED WITH L+C Collect financial info on temporary period usually year = temporary …. R-E-W Permanent A= L+C … new year just doesn’t go away like ^
Background image of page 3

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

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/05/2011 for the course ECON 2005 at Virginia Tech.

Page1 / 14

Accounting Class 1 - Accounting- Recording and reporting...

This preview shows document pages 1 - 4. Sign up to view the full document.

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