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Chapter 1

COB 241 Chapter Notes - Chapter 1: Management Accounting, Accountant, Retained Earnings

College of Business
Course Code
COB 241
James Irving

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Ch.1: Intro to Accounting
Market: a group of people or entities organized to exchange items of value
Profit, Income, or Earnings: terms for the added value created in the transformation process
Businesses need financial resources to get started and to operate
Investors, creditors
Businesses: conversion agents
Financial resources: money
External users  financial accounting
Internal users  managerial accounting
Public accounting: audit services, tax services, & consulting services
Businesses communicate information to stakeholders through four financial statements:
1. An income statement
2. A statement of changes in equity
3. A balance sheet
4. A statement of cash flows
Assets: the resources a business uses to make money
Liabilities: obligations a business has to its creditors
Stockholders: investors
Stockholder’s Equity: the business’s commitment to the stockholders
Common Stock: the certificate that describes the specific commitment made to the investors
Assets = claims
Assets = Liabilities + stockholder’s equity
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