ACCT 2331 Lecture Notes - Lecture 1: Sole Proprietorship, Net Income, Financial Accounting

• School: University of Houston
• Department: Accounting
• Course: ACCT 2331
• Professor: Sam Goble

Document Summary

Assets = lia(cid:271)ilities + sto(cid:272)k holde(cid:396)s" e(cid:395)uity (cid:894)o(cid:449)(cid:374)e(cid:396)s" e(cid:395)uity(cid:895) *the fundamental model of business valuation is commonly referred to as this* *a = l + o/e stock in balance* Expenses: cost of providing products and services; supplies expense. Gross profit: you pu(cid:396)(cid:272)hase a(cid:374) ite(cid:373) fo(cid:396) (cid:1004), (cid:271)ut sell it fo(cid:396) (cid:1004)(cid:1004) you(cid:396) g(cid:396)oss p(cid:396)ofit (cid:1004). *personal expenses cannot be combined with business expenses* Cash returns to the stockholder of the company. 3 statements of cash flows: operating activities, investing activities, financing activities. The 2 primary functions: communicate information to decision makers, mai(cid:374)tai(cid:374) (cid:396)e(cid:272)o(cid:396)ds of a (cid:272)o(cid:373)pa(cid:374)y"s ope(cid:396)atio(cid:374) Accountants primary information-related roles: measu(cid:396)e (cid:272)o(cid:373)pa(cid:374)y"s a(cid:272)ti(cid:448)ities, co(cid:373)(cid:373)u(cid:374)i(cid:272)ate (cid:373)easu(cid:396)e(cid:373)e(cid:374)ts of (cid:272)o(cid:373)pa(cid:374)y"s a(cid:272)ti(cid:448)ities to othe(cid:396) Financial accounting: measuring business activities and reporting those measurements to external parties. Managerial accounting: accounting information that is provided for internal users (managers) Investors: buying and selling their shares of stock. Corporation: business organization that issues shares of stocks to its investors.