ACCT1501 Lecture 1: Week 1 Lecture Notes ACCT 1501

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University of New South Wales
Peter Ross

Week 1 Lecture Notes Monday, 1 May 2017 10:05 PM Introduction to Financial Accounting & Key Financial Statements 2. What is Accounting? • Accounting is the process of identifying, measuring and communicating economic information to assist users to make decisions. 4. There are 3 key financial statements: The Balance Sheet, Income Statement and Cashflow Statement( covered in next semester) Balance Sheet: • a snapshot of the financial position of an enterprise at a particular point in time • Sometimes referred to as the Statement of Financial Position • Identifies the entity's resources and how they were financed It is used to assess financial structure and ability to pay debt The sheet consists of 3 main elements: Assets • Resources (they will benefit the company this year (current) or in future years (non-current) • e.g. cash, property, equipment, inventory Liabilities • What the company owes • e.g. accounts payable, loan payable Equity (net assets) • What belongs to the owners, the residual, for example what is left after the liabilities are taken care of • e.g. share capital, retained profits Assets (resources) = Liabilities + Equity (Sources) Income Statement: • Analyses the financial performance of an enterprise over a period of time (e.g. annually) • Discusses whether the entity has used its resources efficiently and effectively • Sometimes referred to as the Profit and Loss Statement Shows the results of business operations a specific time period and reports revenues earned and any expenses incurred Revenue: inflows of economic benefits that increase owner's equit
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