Midterm Study Guide

Midterm Study Guide - GAAP( Generally accepted accounting...

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GAAP ( Generally accepted accounting principles ) = rules a for-profit place must follow Three principle types of business activity: 1. Financing= collecting necessary funds to support the business 2. Investing= acquiring resources necessary to run the business 3. Operating= putting the resources of the business into action to generate a profit Interrelationships of financial statements: 1. RE depends on NI from IS 2. BS lists RE 3. Statement of cash flows relates to info on BS. Ending cash must be = on BS and Cash flows statement. INCLUDED IN ANNUAL REPORT: 1. Income statement= (profitability) states the revenues and expenses of a comp. for a period of time 2. Statement of RE= changes in RE that have occurred over a specific period of time 3. Balance Sheet= (solvency) reports assets, liabilities, and stockholder’s equity at a specific date 4. Statement of cash flows = summarizes info concerning cash inflows and outflows for period Management discussion and analysis =covers company’s ability to pay near-term obligations, its ability to fund operations and
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Midterm Study Guide - GAAP( Generally accepted accounting...

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