ACC_202_Course_Pack_Summer_Notes_-_Stude

ACC_202_Course_Pack_Summer_Notes_-_Stude - MSU ACC 202...

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MSU ACC 202 Summer 2009 KEY ACC 201 FINANCIAL ACCOUNTING TOPICS 1. Double entry accounting All transactions affect at least two accounts Keep the accounting equation in balance CAPITAL STOCK ASSETS = LIABILITIES + STOCKHOLDERS’S EQUITY RETAINED EARNINGS REVENUES – EXPENSES = NET INCOME 2. Two of the three required financial statements for a business “articulate” or fit together in this way (note: the other required statement is the Statement of Cash Flows): Balance Sheet as of 12-31-09 Income Statement for the year ended 12-31-09 Assets : Cash A/R Inventory Capital assets Total Assets Liabilities: A/P Accrued expenses Long-term Debt Equity : Capital stock Retained earnings Revenues or sales Less: Costs and operating expenses Net Operating Income (or EBIT or IBIT) Less: Nonoperating Items (e.g., interest expense, taxes, gains/losses) Net Income 3. Accrual basis of accounting vs. cash basis of accounting (GAAP) Revenues are recognized when earned Revenues recognized when received Expenses are recognized when incurred Expenses recognized when paid Accrue earned income and defer prepaid expenses No accruals or deferrals Depreciate capital assets (other than land) No depreciation of capital assets 4. Generally accepted accounting principles (GAAP) 1
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MSU ACC 202 Summer 2009 U.S. GAAP International GAAP (IFRS) 5. Organizations can be classified as to the types of: Products or services they provide, e.g., Legal structure, e.g., Service For-profit or commercial or business Merchandising Governmental Manufacturing Nonprofit Chapter 1 Managerial Accounting and the Business Environment How does managerial accounting (ACC 202) compare to financial accounting (ACC 201)? DIFFERENCES: Managerial Accounting Financial Accounting Focus on internal management reports for decision making by managers inside of the organization Focus on external users of financial statements for use by stockholders, creditors, and other stakeholders outside of the organization Reports do not have to comply with GAAP Statements follow generally accepted accounting principles (GAAP) SIMILARITIES : Both provide essential accounting data to managers and other users Both rely on the same underlying data generally from the same accounting information system (AIS) Both financial and managerial accountants have similar education and training (e.g., in accounting, economics and finance) 2
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MSU ACC 202 Summer 2009 Role of the manager in an organization A. Plan —establish a basic strategy B. Direct and motivate —mobilize people to carry out plans and run routine operations C. Control —ensure that the plan is actually carried out and is appropriately modified as circumstances change Organization chart for an entity: What are line positions? Those people who are directly involved in achieving the basic objectives of the organization, such as the Board of Directors, President, VP of Operations, and Manager of the U.S. Plants, and Manager of the International Plants.
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This note was uploaded on 11/11/2011 for the course ACC 202 taught by Professor Sue during the Summer '10 term at Michigan State University.

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ACC_202_Course_Pack_Summer_Notes_-_Stude - MSU ACC 202...

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