Class Notes (836,215)
Canada (509,690)
Accounting (778)
ACC 100 (234)
Lecture

ACC 100 Notes ENTIRE COURSE.docx
Premium

15 Pages
166 Views
Unlock Document

Department
Accounting
Course
ACC 100
Professor
Raymond Moss
Semester
Fall

Description
ACC 100 Vocab List Week 1: Chapter 1: Introduction to Accounting  Business o sole proprietorship o Partnership o Corporation  Unlimited liability  Business activities o Financing – raising funds o Investing – buying/selling land, building, equipment o Operating – selling goods/services  Internal users – management  External users – banks, customers, financial analysts, competitors, suppliers, stockholders  Accounting: A system & process for identifying, measuring, analyzing, summarizing, reporting economic information about an entity to various users  Financial statements o Income statement (results of operations)  Revenues  Expenses  Net income o Statement of retained earnings (changes in earnings)  Beginning balance  Net income  Dividends  Ending balance o Balance sheets (financial position at a point in time)  Assets  Liabilities  Owner’s equity o Cash flow statement (cash consequences of transactions)  Operating  Investing  Financing activities Week 2: chapter 2: Financial Statements and the Annual Report  Liquidity ratio = current assets / current liabilities  Qualitative characteristics o Understandability o Relevance (capacity to make a difference) o Reliability o Verifiability o Representational faithfulness o Neutrality o Conservatism (when in doubt think negative) o Comparability o Consistency o Materiality o Benefit vs cost  Financial o Going concern o Monetary unit Week 3: Chapter 3: Processing Accounting Information  External events  Internal events  Measurable  Realized  Transaction  Source document – evidence needed in an accounting system to record transactions Week 4: Chapter 4: Part 1  Recognition – formally recording an item in the financial statements of an entity  Measurement – quantification of the effects of the item on the entity  Economic events are recognized and measured  Cash basis accounting – records revenue when cash is received, records expenses when cash is paid  accrual basis accounting – record revenue when earned, records expenses when incurred, used, consumed to generate revenue  Adjusting entries o Prepaid expense  Rent, insurance, office supplies, plant & equipment o Unearned revenue  Rent, subscriptions collected in advance  Overstated, understated  Depreciation expense per year = (orig cost-salvage value)/useful life Lecture 4: Ch 4 pt 2:  Accrued liability (expense) o Expense incurred before cash is paid  Wages, taxes, interest  Never an initial entry  Always has increase to liability account, increase to expense account  Never cash!  Wages earned but not yet paid  Income taxes owed at end of year  Accrued asset (revenue) o Revenue earned before cash is received  Sell a product, provide a service  never has initial entry  increase to asset, increase to revenue  rent owed by tenant not yet collected  interest earned on customer loan not yet collected  Deferred Expense  Paid in advance  Office building purchased for cash  Deferred Revenue  Cash collected from subscriptions in advance of publishing a magazine  Rent collected in advance from tenant Chapter 5: Merchandising Operations  Wearing two hats o Purchaser of inventory o Seller of inventory  Revenue Recognition Principle (Good) o Risk/rewards transferred from seller to buyer o Collectability is reasonably assured o Measureable  Revenue Recognition Principle (Service) o Collectability is reasonably assured o Measureable o Performance  Interest = principle * rate * time (# of months passed/12)  FOB Destination ( paid by seller)  FOB Shipping Point (paid by buyer)  Credit Terms o Ex. 2/10, n/30 o Pay within 10 days, get 2% discount o Otherwise pay the amount within 30 days, no discount  Bought inventory on account  + inventory, +account/payable  Get discount  -cash, -inventory, -a/p   Sell item o +sales, +a/r o –inventory, -COGS  Customer receives discount because they paid early o +cash, -a/r, -sales discount expense  If inventory is returned but damaged o ONLY FIX SALES ENTRY NOT COST ENTRY  Expense recognition o Assets  Inventory when sold  Supples/prepaid assets when consumed  Pp&E, intangibles over period as incurred o Expenses  COGS when sold  Expense when consumed  Ammoritzation expense o Direct expenses (connected to revenue) o Indirect expenses (hydro costs)  Sales returns and allowances + sales descounts expense accounts are contra revenue accounts  Perpetual inventory (inventory is always updated) Chapter 6: Inventory and COGS  What is inventory o Assets held for resale (finished goods) o Processing goods (wips) o Materials, components, supplies o Measurement: existence, quantities, valuation o Management: Justin in time, controlling quantities/access  Corner store o Cash register manual o Inventory records update periodically o No transaction analysis o Physical inventory count  Grocery store o Scanning system o Perpetual o Inventory records update after each sale o Inventory + COGS up to date o Still need to count, does not log perishable items, breakage, theft, misplacement, human error, items on consignment, in shipping  Transit: o FOB Destination (seller) o FOB Shipping Point (Buyer)  Owns inventory in transit  Cost of freight  Responsibilities  In order to value inventory we need: opening inventory, purchases during year, quantity on hand at end of year o # of units available for sale = beg inv + purchases o Sold = units available – units left o COGS = units sold * price/unit o End inv value = # of units left * price/unit  Even if you buy from same supplier throughout the year, the COG may vary due to: duty, taxes, exchange rate, freight costs  Specific identification o Only used when inventory can be specifically identified  Car  Electronics  Appliances o Able to match actual expenses with revenues o However net income can be manipulated by selling specific units o o o  Weighted average o Assigns same unit cost to all units available for sale during period o Easy approach to costing inventory o Av cost/unit = COGS/units available for sale  FIFO (First in, first out) o Assigns first items purchased to the COGS and most recent costs to ending inventory o o o FIFO HINTS  Create chart, calculate value of available for sale FIRST  Start at TOP of chart to calculate COGS  Start at BOTTOM to calculate ENDING INVENTORY o o o Items bought first were cheaper, FIFO has greater profit b/c COGS is cheaper o Higher inventory av. Is FIFO, inventory left is cost more, FIFO is based on most recent inventory which are more expensive  FIFO results in highest income taxes during periods of inflation  LIFO is not permitted for financial reporting and tax purposes in Canada  FIFO results in highest income during periods of inflation  FIFO results in highest ending inventory during periods of inflation  AV. Cost smooths out costs during periods of inflation  Specification is not practical for most businesses  Av cost puts more weight on the cost of the larger number of units purchased  FIFO is an assumption that most closely reflects the physical flow of goods for most businesses     Charged as a loss account on income statement o Lower cost in market (LCM)  Conservatism  Don’t overstate assets o Pg 279 ex 6-15 o If they don’t report the new market value, their inventory will be overstated, need to follow conservatism or else it will be misleading o Inventory will be affected,
More Less

Related notes for ACC 100

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit