Unit 7? Accounting!

StudyBlue printing of Unit 7? Accounting! html, body, div, span, applet, object, iframe, h1, h2, h3, h4, h5, h6, p, blockquote, pre, a, abbr, acronym, address, big, cite, code, del, dfn, em, font, img, ins, kbd, q, s, samp, small, strike, strong, sub, sup, tt, var, b, u, i, center, fieldset, form, label, legend, table, caption, tbody, tfoot, thead, tr, th, td { margin: 0; padding: 0; border: 0; outline: 0; font-size: 100%; background: transparent; } body { line-height: 1; } blockquote, q { quotes: none; } blockquote:before, blockquote:after, q:before, q:after { content: ''; content: none; } /* remember to define focus styles! */ :focus { outline: 0; } /* remember to highlight inserts somehow! */ ins { text-decoration: none; } del { text-decoration: line-through; } /* tables still need 'cellspacing="0"' in the markup */ table { border-collapse: collapse; border-spacing: 0; } /* end RESET */ .header { min-width:800px; } .logo { padding:6px 20px 2px 20px; margin:0; font-size:25px; font-weight:bold; color:#808285; position:relative; border-bottom: 1px solid #c5c5c5; } .logo-blue { color:#70adc4; } .logo-desc { font-weight:normal; font-size:19px; color:#cccccc; margin-top:50px; position:absolute; display: none; } .back-button { position:absolute; top:20px; right:20px; font-size:13px; line-height:25px; color:rgb(0,175,225); font-weight:normal; } .back-button a { color:rgb(0,175,225); } .instructions { padding:0; margin:0; width:100%; position:relative; color:rgb(100,100,100); } .step-holder { border-left:1px solid #ededed; margin-left:20px; } .steps { padding:15px 0; float:left; width:24%; border-right:1px solid #ededed; text-align:center; } .steps-01 { } .steps-02 { } .steps-03 { } .steps-04 { } .label { padding:5px 10px; } .print-button { } .print-button a { background-color:rgb(0,175,225); color:white; line-height: 19px; padding:9px 8px 5px 30px; font-size:14px; text-decoration:none; background-image: url(images/printer.png); background-repeat: no-repeat; background-position: 7px 50%; -moz-border-radius: 5px; -webkit-border-radius: 5px; } .print-button a:hover { background-color:black; } .theNote .content { width: 8.0in !important; margin: 5px auto; padding:20px; background-color:white; } .theNote .header { border-bottom: 1px dashed #C8C8C8; font-size: 17px; padding: 0 0 10px; line-height: 19px; color: #00ADE1; min-width:500px; } .theNote .body { font-size: 14px; line-height: 19px; padding: 10px 0; } .theNote{ padding:6px 0; clear:both; background-color: rgb(200,200,200); } .theNote h3{ color: rgb(100,100,100); } .theNote h1, .theNote h3{ background-color:white; padding:2px 20px; width:8.0in !important; margin: 0 auto; font-size: 15px; } .theNote h1{ padding-top: 10px; font-size: 15px; } .theNote h1:first-child{ font-size: 20px; } .theNote h3 { font-size: 14px; font-weight: normal; } #options { border: 3px double #ccc; padding: 5px 12px; margin: 10px 50px 10px 20px; float: left; } #info { border-top: 1px solid #ccc; padding-top: 5px; font-style: italic; } li { margin: 5px 10px 5px 25px; } ul li { list-style: disc; } ol li { list-style: decimal; } img { border: 0; } table { clear: both; width: 100%; border: 1px solid #c5c5c5; border-width: 1px 0; margin: 0; page-break-after: always; } table#page { page-break-after: auto; } td { text-align: center; font-size: 12px; border-bottom: 1px dashed #c5c5c5; height: 1.75in; width: 50%; padding-left: 15px; } .leftside { border-right: 1px solid #cccccc; padding: 0 15px 0 0; } .bottom td { border-bottom: none; } .clearfix { clear:both; line-height:1px; height:1px; } img { max-width:80%; max-height:150px; margin:20px; } @media print {.header { display: none; } .content .header{ display:inherit; } table { border: 1px dashed #bbb; border-width: 1px 0; } .theNote{ background-color:white; } } ACCOUNTING! Financial Accounting - Recording, Classifying, Summarizing and Interpreting of financial events and transactions in an organization to provide interested parties needed financial information. External users - such as employees, owners, creditors, investors, the government, etc. - make use of a girm's financial accounting information. Use their info. Managerial Accounting - Provides information and analysis to managers inside the organization to assist them in decision making. Internal decision making. Is involved with: Costs of production Costs of marketing Preparation and control of budgets Minimizing tax liabilities Financial Accounting - Recorded financial information is generated for people primarily outside the organization. External users are interested in these questions: Is the organization profitable? Will it be able to pay its bills? How much total debt does it have? Annual Report - A yearly report of the financial condition, progress, and expectations of the firm (includes the financial statements). Private Accountant vs. Public Account Private Accountants - Work in a single firm, government agency, or nonprofit organization. Public Accountants - Provide accounting services to individuals or businesses. CPA - Accountants who have passed a series of examinations established by the AICPA and met requirements for education and experience. Auditing - Reviewing and evaluating the information used to prepare a company's financial statements. Independent Audit - An evaluation and unbiased opinion about the accuracy of a company's financial statements. Certified Internal Auditors - Accountants who have a bachelor's degree and two years of experience in internal auditing and pass an exam administered by the Institue of Internal AUditors Accounting Cycle - A six-step procedure that results in the preparation and analysis of the major financial statements. Bookkeeping - The recording of business transactions into a record book (or computer program) called a JOURNAL Double-Entry Bookkeeping - Bookkeepers record all transactions in two places so they can check one list of transactions against the other for accuracy. Journal - An accountant's "diary". Ledger - A specialized accounting book where all information is categorized by similarity (accounts) Trial Balance - A summary (ending balance) of all the information in the account ledgers. Financial Statement - A summary of all the financial transactions that have occurred over a particular period. Key financial statements are: Balance sheet Income statement Statement of cash flows The accounting Equation - The basis for the balance sheet Assets = Liabilities + Owners Equity Must always be balanced! Assets - Economic resources owned by a firm. Items can be tangible or intangible. Liquidity - Ease with which assets can be converted into cash. Current Assets - Items that can or will be converted to cash within one year. Fixed Assets - Long term assets that are relatively permanent such as land, buildings, or equipment. Intangible Assets - Long-term assets that have no physical form but do have value such as patents, trademarks, and goodwill. Liabilities - What the business owes to others - it's debts. Term - Length of time that will elapse before debt must be paid in full. Curent Liabilities: Accounts Payable - Current liabilities a firm owes to other companies for merchandise or services purchased on credit. Notes Payable - Short or medium-term liabilities a business promises to pay by a certain date. Long-Term Liabilities: Notes Payable - Medium or long-term liabilities a business promises to pay by a certain date. Bonds Payable - Long-term liabilities that the firm must pay back. Owner's Equity Accounts The amount of the business that belongs to the owners minus any liabilities of the owners. Retained Earnings - Accumulated earnings from the firm's profitable operations that are reinvested in the business. Income Statement - Financial statement that shows a firm's bottom line. Profit after costs/expenses/taxes. Covers a period of time ex: Dec 1st - Dec 31st. Net Income or Net Loss - The revenue left over or depleted. The Final Number. Revenues- The monetary value a firm received for goods sold, services rendered or other payments Cost of Goods Sold (or Manufactured) - Measures the cost of merchandise the firm sells or the cost of raw materials and supplies it used in producing items for resale. Gross Profit - How much a firm earned by buying and selling merchandise. Operating Expenses - Expenses a firm incurs in selling goods and services such as rent, salaries and supplies. Depreciation Expense - The systematic write-off of the cost of a tangible asset over its estimated useful life. Statement of Cash Flows - Reports cash inflows and cash outflows over a period of time related to the three major activities of a firm: Operating Activities Investing Activities Financing Activities Cash Flow - The difference between cash coming in and cash going out of a business Ratio Analysis - The assessment of a firm's financial condition using calculations and financial ratios developed from the firm's financial statements. Liquidity Ratio - Measures a firm's ability to turn assets into cash to pay its short-term debts. Current Ratio = Current Assets/ Current Liabilities. Shouold be around 2.1 Ratio Leverage ratio - Measures the degree to which a firm relies on borrowed funds in its operations. Debt to Equity Ratio = Total Liabilities/ Owner's Equity. Should be around 1.1 Ratio. Profitability Ratio - Measures how effectively a firm's managers are using the firm's various resources to achieve profits. Return on Equity Ratio = Net income/ Owner's Equity Activity