2_Business Activity and Financial Accounting

2_Business Activity and Financial Accounting - Last Class...

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Last Class Introduced Business Basics and 3 primary activities – Financing, Investing & Operating Potential uses/users of accounting Discretion in Accounting 4 Financial Statements Reporting: Cost & Benefits Implications to users of financial statements Mgmt 600 Class 2 Notes: Johnston Copyright 2011 Page 1
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Today’s Objectives To understand the accounting process and how business activity maps into the financial statements. Agenda What is the Accounting Process? Re-visiting the balance sheet equation Recording events Case: The Garden Place Mgmt 600 Class 2 Notes: Johnston Copyright 2011 Page 2
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Accounting Process Which events do you record, and when? At what value (how) do you record the events? FINANCIAL ACCOUNTING PROCESS Mgmt 600 Class 2 Notes: Johnston Copyright 2011 Page 3
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Economic Events 1. Operating Activities Production and sale 2. Investing Activities Acquisition and disposition of assets 3. Financing Activities Borrowing and repayment Issuance and repurchase of stock, dividends 4. Other Occurrences Financial Accounting GAAP G enerally A ccepted A ccounting P rinciples principles, rules and procedures governing which transactions and events are to be reported, when they are to be reported and how they are to be reported Analyze and record the economic effect of the transactions and events Summarize, aggregate classify and report the information Financial Reports Balance Sheet Income Statement Cash Flow Statement Statement of Shareholders’ Equity Footnotes Today will do by example (Garden Place), will discuss concepts and definitions as we proceed.
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