COMM 111 Final: FINAL Exam Notes.doc
Document Summary
Accounting assumptions: entity assumption: an accounting entity is an organization that stands apart as a separate economic unit (personal vs business finances), going concern assumption: the entity will continue to operate in the foreseeable future, cost assumption: assets and services acquired should be recorded at their actual (historical) cost, stable monetary unit assumption: a dollar"s purchasing power is relatively stable over time (assume that there is no inflation). Balance sheet: assets = liabilities + shareholder"s equity > a = l + se, shareholder"s equity = contributed capital + retained earnings > se = cc + re, bb of retained earnings +( ) net income(loss) dividends = eb of retained earnings, a/r (gross) allowance for uncollectible accounts = a/r (net) or net realizable value, allowance for uncollectibles: bb + bad debt expense + recovery write offs = eb, pp&e (gross) accumulated depreciation = carrying amount of pp&e (pp&e net, straight line method of depreciation: (depreciation = cost residual value/useful life)
