THE ACCOUNTING INFORMATION SYSTEM
Transactions are economic events that require recording in
the financial statements.
Assets, liabilities, or stockholders equity items change as a
result of some economic event.
ACCRUAL ACCOUNTING CONCEPTS
Accountants divide the economic life of a business into
artificial time periods (Periodicity Assumption ).
Revenue/Expense Recognition Principle
The Revenue Recognition Princip
REPORTING AND ANALYZING INVENTORY
Classifying and Determining Inventory
Work in Process
LO 1 Determine how
A FURTHER LOOK AT FINANCIAL STATEMENTS
The Classified Balance Sheet
Assets that a company expects to convert to cash or use up
within one year or the operating cycle, wh
STATEMENT OF CASH FLOWS
Usefulness of the Statement of Cash Flows
Provides information to help assess:
1. Entitys ability to generate future cash flows.
2. Entitys ability to pay dividends and obligations.
3. Reasons for the difference between
REPORTING AND ANALYZING LONGLIVED ASSETS
Plant assets are resources that have
physical substance (a definite size and shape),
are used in the operations of a business,
are not intended for sale to customers,
are expected to provide
REPORTING AND ANALYZING
Types of Receivables
Amounts due from individuals and companies that are
expected to be collected in cash.
owe on account that
result from the sale of
goods and services.
FRAUD , INTERNAL CONTROL
, AND CASH
Bank statement shows companys bank transaction and balance.
BANK Debit Memorandum (decrease customers bank account
Bank service charge.
NSF (not sufficient funds) , i.e. bounced ch
AND ANALYZING LIABILITIES
1. Company expects to pay the debt from existing current assets
or through the creation of other current liabilities.
2. Company will pay the debt within one year or the operating