BUS 160 Lecture Notes - Lecture 4: Financial Accounting Standards Board, Financial Statement, Income Statement
Document Summary
Accounting: a system for analyzing and reporting information about the financial transactions of an organization. Used by: managers, stockholders, employees, creditors, suppliers, government agencies. Accounting roles: public accountant, managerial accountant, government accountant. Must follow gaap(generally accepted accounting principles), the set of accountant standards. The financial accounting standards board (fasb) establishes gaap. Gaap ensures that statements are relevant, reliable, consistent and comparable. Balance sheets: report financial value of a firm at a given point in time. O(cid:449)(cid:374)e(cid:396)"s e(cid:395)uity: claims that owners have on their (cid:272)o(cid:373)pa(cid:374)y"s assets. Lia(cid:271)ilities: (cid:272)lai(cid:373)s that othe(cid:396)s ha(cid:448)e o(cid:374) a fi(cid:396)(cid:373)"s assets. Income statement: (cid:396)epo(cid:396)ts (cid:396)esults of a fi(cid:396)(cid:373)"s ope(cid:396)atio(cid:374)s o(cid:448)e(cid:396) a gi(cid:448)e(cid:374) ti(cid:373)e pe(cid:396)iod. Revenue: result of activities that earn income. Expenses: resources and money used to operate business. Net income: difference between revenue and expenses. Statement of cash flow: ide(cid:374)tifies a fi(cid:396)(cid:373)"s sou(cid:396)(cid:272)es a(cid:374)d uses of (cid:272)ash i(cid:374) a gi(cid:448)e(cid:374) a(cid:272)(cid:272)ou(cid:374)ti(cid:374)g pe(cid:396)iod due to . Financing activities (issuing additional stock; dividend payments)
