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ACCT 1220- Final Exam Guide - Comprehensive Notes for the exam ( 31 pages long!)


Department
Accounting
Course Code
ACCT 1220
Professor
Philippe Lassou
Study Guide
Final

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U of G
ACCT 1220
FINAL EXAM
STUDY GUIDE

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ACCT1220 Chapter One (Lecture One)
-Accounting identifies and records the economic events of an organization and communicates
to interested users
-there are 2 broad categories:
-Internal Users:
-manage the company, non-profit, government organization
-company officers, managers and directors in finance, marketing, human resources and
production
-External Users:
-do not work for the company
-investors, lenders, and other creditors
-customers, employees, labour unions
-taxing authorities and regulators
-forms of business organizations:
-proprietorship:
-owned by one person
-simple to set up
-owner has control over business
-limited life
-unlimited liability
-income tax paid by owner
-partnership:
-similar to proprietorship except owned by more than one person
-formalized in a written agreement
-limited life
-each partner has unlimited liability
-income tax paid by individual partners
-corporations:
-separate legal entity owned by shareholders (owners of shares)
-indefinite life
-ease of raising capital
-shareholders enjoy limited liability
-corporation pays income tax
-may be public (shares are publicly traded) or private (not available to the general public)
-GAAP (Generally Accepted Accounting Principles):
-rules and practices for the preparation of financial statements
-different for publicly-traded (they use International Financial Reporting Standards - IFRS)
and private corporations (they use either IFRS or Accounting Standards for Private
Enterprises - ASPE)
-proprietorships and partnerships generally follow ASPE for external reporting but not
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-required to follow any particular standards for internal use
-three types of business activities:
-Financing:
-obtaining (and repaying) funds to finance the operations of the business
-selling or repurchasing shares (equity)
-borrowing money or repaying loans (debt)
-forms of debt:
-bank indebtedness, bank loans, long-term debt such as mortgages, bonds finance leases
-Investing:
-purchase or sale of long-lived assets needed to operate the company
-example: purchase or sale of long-lived assets such as property, plan and equipment and
intangible assets; purchase or sale of investments, such as shares or debt securities of
other companies
-Operating:
-operating activities are the main day-to-day activities of the business
-example: revenues (income), expenses, related accounts such as A/P and A/R
-Financial Statements:
-Income statement:
-reports revenues and expenses for a specific period of time
-Statement of changes in equity:
-reports the changes in each component of shareholders’ equity during a period of time
-Statement of financial position:
- shows the assets, liabilities and shareholders’ equity at a specific point in time
-Statement of cash flows:
-shows, for a specific period of time, how company obtained cash and how that cash was
used
-order of preparation of statements:
1 - income statement
2 - statement of changes in equity
3 - statement of financial position
4 - statement of cash flows
-Income Statement:
-revenues:
-arise fro sales of a product or services
-result in an inflow of assets
-expenses:
-costs of assets consumed or services used to generate revenues
-net income (loss)
= revenues - expenses
-Statement of Changes in Equity:
-shows the changes in each component of shareholders’ equity for the period
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