Prelim II Lecture - Accounting 16:14...

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Accounting 16:14 Accounting and the accounting process Financial statements Accounting procedures and standards Accounting: The recording, classifying, summarizing, and interpreting of financial events  and transactions to provide management and other interested parties the information  they need to make good decisions Areas of Accounting Financial Accounting-provides a mean to analyze business Annual report Private accountant Public account C.P.A Auditing Tax Accounting Assists with tax collection Managerial Accounting Inside organization C.M.A. Financial Reports pinpoint problems and opportunities The Accounting System Inputs- Processing- Outputs
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Accounting Equation Assets=Liabilities+Owner’s Equity Owned=Owed+Owner’s Claims The typical Balance Sheet Assets Current Assets Cash Accounts Receivable Notes Receivable Inventory Fixed Assets Land Buildings Depreciation Capital equipment Depreciation Liabilities Current liabilites Accouns payable Notes payable Accrued Taxes
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Accrued Salaries Long-term liabilities Long-term liabilities Noes Payablle Bonds Payable Owner’s Equity Stocks shares Retained earnings TheTypical Income Statement Net Sales Cost of Goods sold Gross proft Operating Expenses Net Profit Before interet and taxes interest Taxes net profit after taxes Accounting Procedures- Examples Inventories FIFO: first In, First out LIFO: Last In, First Out Depreciation Systematic write-off of the cost of a tangible asset over its estimated useful life Straight line Accelerated Accounting is not an exact science Accounting Standards  GAAP: Generally Accepted Accounting Principles FASB: financial Accounting Standards Board SEC: Securities and Exchange Commision CPA: Certified Public Accountant IAS: International Accounting Standards IASB: International Accounting Standards Board (London) Pro-forma Accounting A statement of the company’s financial activities
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Financial Statement Analysis                   16:14 Ratio Analysis 
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Financial Statement Analysis                   16:14 Interpreting results of Ratio Analysis The DuPont Method Objective of Financial statement Analysis Find out how Liquid  is an enterprise Find Out how Profitable  is an enterprise Find out how efficient  is an enterprise Using Accounting Information Solvency Ratios Short Term Current ratio Current assets Current liabilities Quick ratio Inventory Current Liabilities Cash + Marketable Securities + Receivables Current liabilities Long Term Debt to equity Total Liabilities Equity
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Financial Statement Analysis                   16:14 Profitability Ratios Profitability= operating success Return on Sales Net income Net sales Return on equity Net income Owner’s equity Earnings Per Share Net income
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This note was uploaded on 02/02/2012 for the course HADM 3387 at Cornell University (Engineering School).

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Prelim II Lecture - Accounting 16:14...

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