Mos 1023 - Lecture Notes.docx

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Department
Management and Organizational Studies
Course
Management and Organizational Studies 1023A/B
Professor
All Professors
Semester
Spring

Description
Chapter 1Constituents of accounting People who are interested in financial statementsCreditorsPeople who will lend you money Ex BanksInvestorsPeople who own a part of your businessFor sole proprietors you must separate your personal accounting from the businesss accountingShareholders dont have to pay for liabilities that the company may incurFor public corporations anyone can buy shares of a company whereas private restricts who can buy sharesMerchandising Business Businesses who sell the products but dont make themService BusinessMost nonprofit organizations are service organizationsEvery single transaction is either a financing investing or operating activitiesInvestment activities What should I invest in for the longterm Its only an investment activity if it lasts in the longterm Shortterm investments such as supplies for an office is not an investment activityOperating Activity Includes the daytoday expenses incurred from running the business If you are a car dealership and buy ten vehicles then it is an operating activity Income statements are temporary accounts because after each year the account starts back at 0 revenue and expensesFundamental Accounting Principle ON EXAM AssetsLiabilitiesOwners EquityExpenses decrease retained earningsNotes receivable is usually longer term with interest where accounts receivable is more shortterm and without interestPrepaid expenses are something that you paid for in advance and you are going to get the benefit of that purchase later on Ex You pay two years worth of rent in advanceAccrued Liabilities are for expenses that we have incurred but not yet paidDeferred revenue is if somebody else prepaid you for something Ex Someone buys an airline ticket from your company far in advance Means it is going to be revenue but not until it is actually providedDebitLeft CreditRight
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