Accounting Ch1 Notes

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Finances in business
Process-------Recording
------interpreting/analyzing
-----communicating
Internalexternal (potential investors)
Users
A=B+C
(A)Assets = (B) Liabilities + (C) Owner’s Equity Assets = Liabilities + owner’s Equity
what IS OWNED/
Owed to you
Cash LoanInvestments
Accounts receivable Account payableWithdrawals
Inventory Note payableRevenues
Equipment Bond payableExpenses
Prepaid Insurance Accrued liabilities

12month+ acc payable
DescriptionPrinciple
1.Usually created by a pronouncement from an authoritative body.

2.Financial statements reflect the assumption that the business continues operating.

3.Derived from long-used and generally accepted accounting practices.

4.Every business is accounted for separately from its owner or owners.

5.Revenue is recorded only when the earnings process is complete.

6.Information is based on actual costs incurred in transactions.

7.A company reports details behind financial statements that would impact users' decisions.

8.A company records the expenses incurred to generate the revenue reported.

a.Wallingford is owned by Gary Malone, who is personally liable for the company's debts.

b.Ava Fong and Elijah Logan own Financial Services, a financial services provider. Neither Fong nor Logan has personal responsibility for the debts of Financial Services.

c.IBC Services does not have separate legal existence apart from the one person who owns it.

d.Computing Services pays its own income taxes and has two owners.

e.Ownership of Zander Company is divided into 1,000 shares of stock.

f.Emma Bailey and Dylan Kay own Speedy Packages, a courier service. Both are personally liable for the debts of the business.

g.Physio Products does not pay income taxes and has one owner....
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