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Chapter 1-4

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ACC 100
Vikraman Baskaran

Chapter 1 Economic Entity Concept: The assumption that a single ,identifiable unit must be accounted for in all situations. Corporation: A form of entity organized under the laws of a particular province or the federal governments. Non-business Entity: organization operated for some purpose other than to earn profit. Creditor: someone to whom a company or person has a debt. Asset: A future economic benefit to an organization. Liability: An obligation of the business. ex :Accounts Payable ,Accrued Liabilities, Salaries & Wages Payable ,Taxes Payable, loan payable, mortgage payable. Revenue: Inflows of assets resulting from the sales of products and services. Expense: Outflows of assets resulting from the sale of goods and services. Accounting: The process of identifying, measuring, and communicating economic information to various users. Owner's Equity: The owners claims on the assets of an entity. Shareholder's Equity: The owners equity in a corporation. Retained Earnings: part of owner's equity that represents the income earned less dividends paid over the life of an entity. Balance Sheet: The financial statement that summarizes the assets, liabilities, and owner's equity at a specific point in time. Income Statement: A statement that summarizes revenues and expenses. Dividends: A distribution of the net income of a business to its owners. Statement of Retained Earnings: The statement that summarizes the income earned and dividends paid over the life of a business. Cost Principal: Assets are recorded at the cost to acquire them. Going Concern: The assumption that an entity is not in the process of liquidation and that it will continue indefinitely. 1. Income Statement  Reports the results of operations for a specific period of time  Revenues, expenses, profit (loss) *one element of “performance”+ 2. Balance Sheet  Reports the financial position at a specific date  Assets, liabilities, shareholders’ equity 3. Cash Flow Statement  Reports the cash consequences of transactions by type of activity for a specific period of time  Cash receipts & disbursements (payments) 4. Statement of Retained Earnings  Reports the changes in retained earnings for a specific period of time  e.g. net income, dividends Financing: a)obtaining funds from creditors ( notes payable, bonds payble, must repay loan or interest) b) owners ( investors in company) payment of dividends Investing: - Funds received are invested to accomplish goals of company - Purchase/ sales or property, purchases of inventory, payments to suppliers, payment of expenses. Operating - activities associated with carry on the business ( ex: sales, collections from customers, purchases of inventory, payments to suppliers, payment of expenses) Chapter 2 Depreciation: T
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