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Exam 1 notes - ACCT2001 06:03 WhatisAccounting...

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ACCT 2001 06:03 What is Accounting The purpose of accounting is to: Identify Record Communicate Who uses accounting Internal uses External Users Ethics Ethics are very important in accounting A few companies have been involved in financial scandals in the past Building blocks of accounting GAAP Generally Accepted Accounting Principles SEC  Federal government agency that oversees the accounting standard setting and financial  markets Created in the 1930s after the stock market crash Takes action against companies with fraudulent bookkeeping FASB Federal Accounting Standards Board
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Private organization primary standard setting body Writes the GAAP rules SEC oversees the FASB Vote on when new rules are to be written IASB International standard setting body There is a convergence occurring currently between FASB and IASB Forms of Business Ownership Proprietorship Partnership LLP Limited Liability Partnership Partnership agreement How the profits are shared How the workload is shared How the losses and debts are shared Retirement, addition of other partners Corporations Ownership divided into stock Owners invest in the business by purchasing stock
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The Basic accounting equation Assets = Liabilities + Stockholders’ Equity Assets Cash Supplies Equipment Land Buildings Investments Accounts receivable Amts owed by customers Intangible assets Trademarks Patents Copyrights Prepaid Assets (ex. Insurance) Liabilities Claims against assets (debts and obligations) Creditors – party to whom money is owed. Accounts payable, Notes payable, etc. Stockholders’ equity
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Ownership claim on total assets Referred to as residual equity 2 parts are: Paid in Capital Retained Earnings (corporation) Assets – Liabilities = Stockholders’ equity 100,000 – 30,000 = 70,000 Stockholders’ Equity Increases to Stockholders’ Equity Investments by stockholders Revenues Sales to a merchandiser
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This note was uploaded on 02/02/2012 for the course BIOL 1002 taught by Professor Pomarico during the Spring '08 term at LSU.

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Exam 1 notes - ACCT2001 06:03 WhatisAccounting...

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