Textbook Notes (280,000)
US (110,000)
UD (1,000)
ACCT (70)
ACCT207 (30)
Chapter 1-5

ACCT207 Chapter Notes - Chapter 1-5: Financial Accounting Standards Board, Accounts Payable, Current Liability


Department
Accounting
Course Code
ACCT207
Professor
Langdon Geoff
Chapter
1-5

This preview shows pages 1-2. to view the full 6 pages of the document.
ACCT 207
Chapter 1:
Sarbanes-Oxley Act (SOX)- reduces unethical corporate behavior; clarifies accuracy of financial
information and penalizes fraudulent financial activity
Liabilities- amounts owed to creditors (debts/other obligations)
o Notes payable- borrowed money that must be returned
o Bonds payable- debt securities sold to investors that must be repaid at a date
o Accounts payable
o Interest payable
o Wages payable
o Sales tax payable
o Property tax payable
o Income tax payable
Common stock- total amount paid by stockholders for the shares they purchase
Dividends- payments to stockholders after required payments to creditors have been paid
Assets- resources owned by a business
o Property, plant and equipment
o Cash
o Investments
o Supplies
o Inventory
o Accounts receivable
Revenue- the increase in assets or decrease in liabilities
o Sales revenue
o Service revenue
o Interest revenue
Expenses- costs of assets consumed or services used in the process of generating revenues
o Cost of goods sold (cost of materials)
o Selling expenses (salaries)
o Marketing expenses (advertising)
o Administrative expenses (salaries/office bills)
o Interest expense (interest on debts)
o Income taxes (corporate taxes paid to the government)
Net income-revenue>expenses
Net loss- revenue<expenses
Financial statements
o Income statement- how successfully a business performed during a period of time
(shows revenues and expenses)
o Retained earnings statement- indicates how much of previous income was distributed
to you and the other owners of your business in the form of dividends and how much
was retained in the business to allow for future growth
o Balance sheet- present representation of what a business owns (assets) and owes
(liabilities)
find more resources at oneclass.com
find more resources at oneclass.com

Only pages 1-2 are available for preview. Some parts have been intentionally blurred.

Assets = liailities + stokholde’s euity
o Statement of cash flows- shows where a business obtained cash during a period of time
and how that cash was used
Chapter 2
Sections of balance sheet:
o Current assets- assets a company expects to convert to cash or use within one year or its
operating cycle
o Operating cycle- average time required to go from cash to cash in producing revenue (to
purchase inventory, sell it and collect cash from customer)
o Long term investments
Investments in stocks and bonds
Long term assets (land/buildings)
Long term notes receivable
o Property, plant, and equipment
Depreciation/ accumulated depreciation
Exclusive rights
o Current liabilities- obligations that the company is to pay within operating cycle
o Long term liabilities- long term debt, obligations a company expects to pay after an
operating cycle
o Stokholde’s euity
Common stock-investments of assets into business by stockholders
Retained earnings- income retained for use in the business
Sections of income statement:
o Revenues
Net sales/other revenue
o Expenses
o Net income/loss
Working capital = current assets current liabilities
Current ration = current assets / current liabilities
Debt to asset ratio = current liabilities / current assets
Standard setters
o SEC securities and exchange commission
o FASB financial accounting standards board
o IASB international accounting standards board
o *IFRS international financial reporting standards
Cost principle- dictates that companies record assets at their cost
Fair value principle- indicates that assets and liabilities should be reported at fair value (price
received)
Full disclosure principle- requires that companies disclose all circumstances and events that
would make a difference to financial statement users
Cost constraint- weighs the cost that companies will incur to provide the information against the
benefit that the financial statement users will gain from having the information available
find more resources at oneclass.com
find more resources at oneclass.com
You're Reading a Preview

Unlock to view full version