Acct final exam SG 1

Acct final exam SG 1 - ACCOUNTING FINAL STUDY GUIDE Chapter...

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ACCOUNTING FINAL STUDY GUIDE Chapter 1 1. Accounting Terminology a) Accounting- the process of gathering, recording, and communicating financial information to interested users on a timely basis b) Forms of business organizations b.i)Sole proprietorship b.ii) Partnership b.iii) Corporation c) Types of business activities c.i) Financial (c.i.1) acquiring capital (money) for the business (c.i.2) two ways to acquire capital: c.ii) Investing (c.ii.1) Using the proceeds from financing activities to purchase items needed for the business c.iii) Operating (c.iii.1) Actually selling a product or providing a service (c.iii.1.a) Revenues = what a company receives for its product/service (c.iii.1.b) Expenses = the costs of providing the product or service 2. Principles and concepts a) Stable-monetary unit concept a.i) Basis for ignoring the effect of inflation in the accounting records, based on the assumption that the dollar’s purchasing power is relatively stable b) Entity concept b.i)An organization or a section of an organization that, for accounting purposes, stands apart from the organization and individuals as a separate economic unit c) Cost principle c.i) Assets and services should be recorded at actual cost d) Going concern principle d.i)The entity will remain in operation for the foreseeable future e) Reliability (objectivity) principle e.i) Ensures that accounting records and statements are based on the most reliable data available 3. Accounting equation: Assets = Liabilities + Stockholder’s Equity 4. Elements of financial statements a) Income Statement a.i) Were a company’s operations successful for a particular time frame? a.ii) Revenues – Expenses = Net Income/Loss b) Statement of Retained Earnings
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b.i)RE- a total that represents profits kept in the business, i.e. not paid out in dividends b.ii) Shows success of operations since the company began c) Balance Sheet c.i) Where did a company get its money from and what have they done with it? c.ii) Shows financing and investing activities d) Statement of Cash Flows d.i)Shows how cash changed over a certain time period, i.e. where did cash come from and where did it go 5. Financial statements preparation a) Securities and Exchange Commission (SEC) a.i) Requires public companies to file financial information annually (Must be audited!) a.ii) Has authority to set accounting practices and standards to be used by companies b) American Institute of CPA’s (AICPA) b.i)Non-government body b.ii) Established a standard setting body c) Financial Accounting Standards Board (FASB) c.i) Sets accounting standards and rules c.ii) SEC retains power to overrule c.iii) Standards that are approved and enacted are… d) Generally Accepted Accounting Principles (GAAP) d.i)Define the standards for external reporting, which creates uniformity Chapter 2 1. Analyze business transactions 2. Double entry accounting 3. Recording transactions 4. Trial Balance Chapter 3 1. Accrual accounting a) Record events as they happen, whether or not cash is involved
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This note was uploaded on 02/02/2012 for the course ACCT 2001 taught by Professor Lowe during the Spring '08 term at LSU.

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Acct final exam SG 1 - ACCOUNTING FINAL STUDY GUIDE Chapter...

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