Accounting 101 Notes - Teacher: David Erlach PDF

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Teacher: David Erlach ...

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Accounting notes

Chapter 1:  

Cost effective: the value of the info produced should exceed the cost of producing it Balance sheet: a position statement that shows where the company stands in financial terms ate a specific date

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Income statement: an activity statement that shows details and results of the company’s profitrelated activities for a period of time Statement of cash flows: an activity statement that shows the details of the company’s activities involving cash during a period of time Generally accepted accounting principles(GAAP): framework for determining what info is included in financial statements and how the info is to be prepared and presented Audit: an investigation of a company’s financial statements, designed to determine the fairness of these statements

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Chapter 2:   

Revenues: positive cash flow Expense: negative cash flow Balance Sheet:

Left

Right

Assets

Liabilities & Owner’s Equity Liabilities:

1) 2) 3) 4) 5) 6)

Cash Notes Receivable Accounts Receivable Supplies Other assets to convert into cash Permanent asset such as equipment, land

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Capital Stock: represents the amount that owners originally paid into the company to become owners. Consists of individual shares and each owner has a set # of shares. Retained Earnings: accumulated earnings of previous years that remain within the enterprise Note Payable: a written promise to repay the amount owed by a particular date and usually calls for the payment of interest as well Accounts Payable: involve no written promises and generally do not call for interest payments

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1) Notes Payable 2) Accounts Payable 3) Salaries Payable Owner’s Equity: 1) Capital Stock 2) Retained Earnings

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Total Assets = Total Liabilities + Owners’ Equity...