RSM220H1 Lecture Notes - A Question Of Balance, Calendar Year, Fiscal Year

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20 Apr 2012
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The Balance Sheet Ch. 2
Fill in the Missing information below:
What is the Balance Sheet?
The Balance Sheet equation: Assets = Liabilities + Owner’s Equity; (A=L+O/E)
The purpose of Accounting
GAAP – what does it stands for? And what are GAAPs?
1. The Business Entity Principle
2. The Cost Principle
Accounting Terms
1. Accounts Receivable
2. Accounts Payable
3. Mortgage Payable
Class-Work
Complete the accounting terms in the Pick-up folder in Assignment 1
Preparing a Balance Sheet
1. Heading
2. Steps
3. Things to note when preparing the B/S statement
Order of items on the Balance Sheet
1. Current Assets
2. Fixed Assets
3. Liabilities
Who would be interested in the Financial Statement of the Company?
Do: Pages 12 – 14
Questions 1-12
Exercises 1-3 then 4-8
Business Transactions
A transaction is an event that occurs during the operation of a business and results in a
financial change. A business transaction is always an exchange of things of value.
Something of Value given up Transaction Something of Value received
1. The Balance Sheet – gives a detailed picture of the financial position of the
business up to a certain date.
2. Transaction Analysis Sheet - is used to assist in the examination of a transaction. It
looks at the effect of the transaction on the B/S
3. Accounting period – is the time used to complete the accounting cycle. It’s the
length of time between the preparation of the financial reports e.g. monthly,
annually (Calendar year, Fiscal year)
- Calendar year – January 1st to December 31st of same year
- Fiscal year – any 12 months of the year
Complete the Following, using your own words:
1. Transaction Analysis Sheet
2. Accounting Period
3. Accounting Cycle
4. The Public Accountant
-serve the public for a fee
Electronic Calculating Tool
Using Spreadsheet