ACC 344 Study Guide - Fall 2018, Comprehensive Midterm Notes - Retained Earnings, Financial Statement, Balance Sheet

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12 Oct 2018
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ACC 344
MIDTERM EXAM
STUDY GUIDE
Fall 2018
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Financial Accounting
concerned with providing financial information to various external users (investors and creditors)
Financial Reporting
process of providing the information to the external users
Corporations
acquire capital from investors in exchange for ownership interest and from creditors by borrowing
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Initial Market transactions
involve issuance of stocks and bonds by the corporation
Secondary Market transactions
involve the transfer of stocks and bods between individuals and institutions
Rate of return
companies can only provide a positive return if they are able to generate a profit from the sale of its
goods or services
cash basis of accounting
measurement of cash receipts and payments from transactions related to providing goods and services
accrual basis of accounting
measurement of revenues and expenses regardless of when cash is paid or received
GAAP
set of broad and specific guidelines that companies should follow when measuring and reporting the
information in their financial statements and related notes
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FASB
represent various constituencies concerned with accounting standards, and include representatives
from auditing, profit-oriented companies, accounting educators, analysts, and govt.
IASB
dedicated to developing a single set of global accounting standards for use by the world's
Net realizable value
= selling price - cost to prepare for sale
Current cost
cost incurred to purchase (only reported if companies operate in inflationary economies
Present value
framework for using future cash flows discounted for the time value of money
Fair value
measurements on price that would be received to sell assets or transfer liabilities in an orderly market
transaction
Assets = liabilities + shareholder's equity
accounting equation
shareholder's equity
made up of paid-in capital and retained earnings
paid-in capital
investments made by owners
retained earnings
amounts earned by corporation on behalf of shareholders less dividends
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Document Summary

Financial accounting concerned with providing financial information to various external users (investors and creditors) Financial reporting process of providing the information to the external users. Corporations acquire capital from investors in exchange for ownership interest and from creditors by borrowing. Initial market transactions involve issuance of stocks and bonds by the corporation. Secondary market transactions involve the transfer of stocks and bods between individuals and institutions. Gaap set of broad and specific guidelines that companies should follow when measuring and reporting the information in their financial statements and related notes. Fasb represent various constituencies concerned with accounting standards, and include representatives from auditing, profit-oriented companies, accounting educators, analysts, and govt. Iasb dedicated to developing a single set of global accounting standards for use by the world"s. = selling price - cost to prepare for sale. Current cost cost incurred to purchase (only reported if companies operate in inflationary economies.

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