BU127 Chapter Notes - Chapter 1-4: Retained Earnings, Cash Flow, Financial Statement
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BU127 Full Course Notes
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Ch1: briefly distinguish financial accounting from managerial accounting. Financial accounting involves preparation of the basic financial statements and related disclosures for external decision makers. Reporting is generally on a quarterly and annual basis. Managerial accounting involves the preparation of detailed plans, budgets, forecasts, and performance reports for internal decision makers. Reporting is on an ongoing basis: briefly distinguish investors from creditors. their share. Investors purchase all or part of a business and hope to gain by receiving part of what the company earns and/or selling they paid. Creditors lend money to a company for a specific length of time and hope to gain by charging interest on the loan. The focus in this chapter is on retained earnings. Net earnings for the year increases the balance of retained earnings whereas the declaration of dividends to the shareholders decreases retained earnings: explain the accounting equation for the statement of earnings. Define the 3 major components reported on the statement of earnings.