[MGT 210] - Midterm Exam Guide - Comprehensive Notes for the exam (43 pages long!)
Document Summary
Financial accounting- an information system for external users in corporations so they can make informed, rational business decisions. Forming a company: sole proprietor- one person, partnership- at least 2 people, corporation- owners, shares of stock needed (whoever has a share is an owner) External users include investors (owners of corporation) and creditors (lenders to corporation) General purpose financial statement: income statement, retained earnings statement, balance sheet, cash flow statement. Elements on financial statement (category of items on statements) Asset- probable (uncertain) future economic resource- has value beyond this period. Liability- probable future economic obligation to do something specific. Equity- residual interest in the asset (asset leftover after liabilities) Revenue- increase in asset/decrease in liabilities from ongoing operations. Transfer an asset or provide a service- creditor claims on asset = liab. Asset liability = net assets owner/investor claim. Paying someone back, or taking payment to do something in the future.
