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ACTG 1P91- Final Exam Guide - Comprehensive Notes for the exam ( 34 pages long!)Premium

34 pages153 viewsWinter 2018

Department
Accounting
Course Code
ACTG 1P91
Professor
Darlene Bay
Study Guide
Final

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Brock U
ACTG 1P91
Final EXAM
STUDY GUIDE
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ACTG 1P91-Lecture 1 Notes-Business Decisions and Financial Accounting
Organizational Forms:
Sole Proprietorship
o a business organization owned by one person. Easy to set up. The owner is personally
liable for business debts
Partnership
o A business organization owned by more than one person. The partners are personally
liable for business debts
Corporation
o A separate legal entity. Often subject to many regulations. The owners (shareholders)
are not personally liable for business debts
Accounting for Business Decisions:
Aoutig is a syste of aalyzig, eodig ad suaizig the esults of a usiess’s
activities and then reporting the results to decision makers.
In Canada there is a new accounting designation, CPA, which stands for Chartered Professional
Accountant.
Currently in the most provinces and territories, all three accounting bodies (CA, CMA and CGA)
have merged or are working towards merging to the CPA designation.
Managerial Accounting reports: are used inside the company. They include detailed financial
plans and reports about the operating performance of the plan organization.
The Basic Accounting Equation:
1)Assets = Liailities + Shaeholde’s Euity
2) Revenue - Expenses = Net income
Assets
o Resources controlled by the company that have measurable value and are expected to
provide future benefits to the company
Liabilities
o Amount that is owed by a creditor to the company or an individual
Shaeholdes’ Euity
o Contributed capital: money that is owed to a company when shares are issued
o Retained earnings: the amount the company ahs earned through business operations
Revenue
o The amount earned by selling goods and services
Expenses
o The cost of running a business that is required to earn revenue
Dividend
o The distributions of a companies to its shareholders to return their investment
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Financial Statements
Income statement
o Reports the amount or revenues and expenses made by a business
Statement of Retained Earning
o Reports how the net income and the distribution of dividends affect the financial
positions of the company during a certain period
Balance Sheet
o Reports assets, liabilities and shareholders equity at a certain time in the business
Statement of Cash Flows
o Reports operating, financing and investing operations that either cause an increase or
decrease in the business
o The statement of cash flow has three parts to it:
Operating
Activities that are directly linked to the business
Investing
Activities that involve purchase and selling of resources with a long live
Financing
Involves loans from the bank, repaying loans and receiving contributions
from shareholders or paying dividend
Using Financial Statements
Financial statements are the source to outsiders to help them make decisions regarding a
company
Creditors
o Usually have their attention to the fact if the company is making enough cash on its loan
Investors
o They expect their return on their contributions to company immediately or long term
Generally Accepted Accounting Principals (GAAP)
o Rules of accounting approved by the Canadian institute of Chartered Accountants to be
used in Canada
International Financial Reporting Standards (IFRS)
o Rules created by the International Accounting Standards Board (IASB) for international
use
Accounting Standards for Private Enterprises (ASPE)
o Rules of accounting that address issues that are more relevant in a private enterprise
and can only be used in private enterprise
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