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
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