Assets = Liabilities + Owners Equity
remember: A L O E
Ex: $320,000 = ________ + $203,000
Internally, accounting reports are used by all Dept. Managers and upper management to evaluate their financial performance and make future plans.
General Accepted Accounting Principles
GAAP ARE PRINCIPLES OR GUIDELINES
The Generally Accepted Accounting Principles are basically guidelines that tell us what to do, they are like rules.
Publicly traded companies have to follow GAAP.
As asset is a resource used to generate revenue.
Examples of revenue are:
A liability is an obligation, or amount owed to another company
PROBABLY FUTURE SACRIFICE
Accounting rules used to prepare, present, and report financial statements for a wide variety of entities.
GAAP ARE PRINCIPLES OR GUIDELINES
GAAS are standards that tell accountants what the standards require and what work will need to be done in performing an audit.
STANDARDS BY WHICH WE WILL AUDIT
A Balance Sheet is a snapshot of a point in time of the assets, liabilities and owners equity.
An Income Statement shows if the company operated for a profit during the period of time in consideration. The income statement will always list the time period in the title.
Period ending in __________
Ex; For the Year Ended 08/31/2011
FASB...authoritative stamdard setting body within the accounting professionals.
SEC....authority to establish acctg principles for firms registered w/SEC.
AICPA...profesional member org that CPA's belong to.
PCAOB...has authority to set and enforce auditing and ethics standards.
Unqualified Opinion, is regarded by many as the equivalent of a “clean bill of health” or a "thumbs up".
Assets - Liabilities = Owners Equity
Net Assets = Owners Equity
Asset acct - Normal Balance Left Side
Liabilities - Normal Balance Right Side
OE - Normal Balance Right Side
Current asset < 12 months
Current liabilities < 12 months
Long Term asset > 12 months
Long Term liabilities > 12 months
List of account names with type of asset: current/non current
Asset T acct debit __________
Owners Equity T acct debit ____________
Credit _________ ROL (Revenue, Owners Equity & Liabilities)
ASSETS=LIABILITIES + OWNERS EQUITY
Economic Event triggers Journal Entry triggers Balance Sheet triggers Income Statement triggers Cash Flow .
IS triggers Net Income triggers Retained Earnings flowing back to BS.
GAAP General Accepted Accounting Principles. THEY ARE PRINCIPLES.
Balance Sheet- listing of org. assets, liabilities & OE at a point in time!
Asset is a resource that the company uses to generate revenue. Examples:
Net Income = R - E + G - L
Net Income = Revenues - Expenses + Gains - Losses
Date and for period ending
Sum of net sales
- Cost of Goods Sold
PG 50 CHART
Retained earnings + net income - dividends = ending retained earnings
exhibit 2-4 Know the 3 categories on page 51
Net Income = Revenues - Expenses
N I R E (DONT WALLOW IN THE NIRE (NOT MIRE)
INCOME - WALLOW - NIRE
Economic Event _ JE: IS _ BS _ CF
NI _ RE
They are treated as an expense
They are on Income Statement
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