Financial Accounting Summary

In: Business and Management

Submitted By offi1804
Words 11031
Pages 45
Accounting Review for the CLEP
Chapter 1 * Accounting “links” decision makers with economic activities and with the results of their decisions * Information Users * Investors * Creditors * Managers * Owners * Customers * Employees * Regulatory agencies * SEC * IRS * EPA * Cost & Revenue Determination * Job costing * Process costing * ABC * Sales * Assets & Liabilities * Plant and equipment * Loans & equity * Receivables, payables & cash * Cash Flows * From operations * From financing * From investing * Decision Support * CVP analysis * Performance evaluation * Incremental analysis * Budgeting * Capital allocation * Earnings per share * Ratio analysis * Basic Functions of an Accounting System * Interpret and record business transactions * Classify similar transactions into useful reports. * Summarize and communicate information to decision makers. * Objectives of Financial Reporting (general to specific) * Information useful in making investment and credit decisions * Information useful in assessing amount, timing and uncertainty of future cash flows. * Information about economic resources, claims to resources, and changes in resources and claims. * The primary financial statements * Balance Sheet * Income Statement * Statement of Cash Flow * Characteristics of Externally Reported Information * A Means to an End * Broader than Financial Statements * Historical in Nature * Results from Inexact and Approximate Measures * Based on General Purpose Assumption * Usefulness Enhanced via Explanation *…...

Similar Documents

Financial Accounting

...CHAPTER 1 Financial Accounting and Accounting Standards 1-1 ASSIGNMENT CHARACTERISTICS TABLE Level of Difficulty Simple Simple Simple Simple Moderate Simple Simple Simple Simple Complex Simple Moderate Simple Simple Complex Moderate Moderate Moderate Moderate Moderate Time (minutes) 15–20 15–20 15–20 15–20 20–25 10–15 15–20 20–25 20–25 30–40 15–20 30–40 15–20 10–15 20–25 30–40 25–35 25–35 25–35 25–35 Item CA1-1 CA1-2 CA1-3 CA1-4 CA1-5 CA1-6 CA1-7 CA1-8 CA1-9 CA1-10 CA1-11 CA1-12 CA1-13 CA1-14 CA1-15 CA1-16 CA1-17 CA1-18 CA1-19 CA1-20 Description FASB and standard-setting. GAAP and standard-setting. Financial reporting and accounting standards. Financial accounting. Objective of financial reporting. Accounting numbers and the environment. Need for GAAP. AICPA’s role in rule-making. FASB role in rule-making. Politicalization of GAAP. Models for setting GAAP. GAAP terminology. Accounting organizations and documents issued. Accounting pronouncements. Rule-making Issues. Securities and Exchange Commission. Rule-making process. Financial reporting pressures. Economic consequences. GAAP and economic consequences. 1-2 Copyright © 2011 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 14/e, Solutions Manual (For Instructor Use Only) SOLUTIONS TO CODIFICATION EXERCISES CE1-1 There is no answer to this requirement as it asks the student to register to use the Codification. CE1-2 (a) The Codification Overview module illustrates three items (1)......

Words: 12637 - Pages: 51

Financial Accounting

...CONSEQUENCES OF NATURAL DISASTERS FOR THE BOARD OF DIRECTORS OF MILLEY LTD Bachelor of Professional Accounting Macquarie University Sydney, Australia 2011 Submitted to the Faculty of Busines and Economics of Macquarie University in partial fulfilment of the requirement for ACCG 224 April, 2011 Word Count = 1484 Table of Contents CONTENTS page Executive Summary Table of Contents Introduction Discussion 1.Research and report on the floors in Queensland 2 Discuss six items 2.1 Items of inventory destroyed or damaged 2.2 Collectability of accounts receivable 2.3 Unfulfilled contract to supply books 2.4 Replacement cost of damaged PP&E 2.5 Cleaning up costs in May 2011 2.6 Receiving Government Assistance Conclusions Recommendations References Appendices EXECUTIVE SUMMARY This research report provides an analysis and evaluation of the current state of Milley Ltd which is a book publisher located in Brisbane. The company's office and warehouse suffered damage during the recent floods and storms. The circumstance resulted accounting issues about the presentation of financial reports for the year ending 31 March 2011. Methods of analysis include background reflection of floods in......

Words: 2561 - Pages: 11

Financial Accounting

...Scientific essay International Financial Reporting Standard for Small and Medium Size Entities: IFRS FOR SMEs 1- Introduction Now days the word has become one global market where there is no border for business to operate. To help facilitate that globalization, businesses have to present their financial statement on the same basis as its foreign competitors, making comparisons easier. That why the use of the International Financial Reporting Standards (IFRS) which is a set of accounting standard is necessary and has for goal to provide a global framework for how public companies to prepare and disclose their financial statements is necessary to be implement. Furthermore, companies with subsidiaries in countries that require or permit IFRS may be able to use one accounting language company-wide. But because of their size and the context of the financial statement small and medium size entities SMEs cannot use the same IFRS as the public companies thought the also aspire to the globalization due to the cost of that full IFRS which may overcome their profit. The use of a special IFRS is welcome. To show that, we are going to talk about the appropriateness, necessity and experience of an IFRS for SMEs by in one hand describing the IFRS for SMEs in insisting on the description of the SMEs; and in another hand by stating the need for an IFRS for SMEs and emphasis in the South Africa context. The IFRS for SMEs will be introduce and in detail with......

Words: 2227 - Pages: 9

Financial Accounting

... 1. Introduction: Financial accountancy (or financial accounting) is the field of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, employees, government agencies, owners and other stakeholders. Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power. The central need for financial accounting is to reduce the various principal-agent problems, by measuring and monitoring the agents' performance and thereafter reporting the results to interested users. Financial accountancy is used to prepare accountancy data for people outside the organization or for those, who are not involved in the mundane administration of the company. Management accounting, provides accounting information to help managers make decisions to manage and enhance the business. In short, financial accounting is the process of sum-arising financial data, which is taken from an organization's accounting records and publishing it in the form of annual or quarterly reports, for the benefit of people outside the organization. Financial accountancy is governed not only by local standards but also by international accounting standard. 2. Role of Financial Accounting: • Financial accounting generates some key documents, which includes profit and loss account, patterning the method of business traded for a specific period and the balance sheet that provides a statement, showing......

Words: 7845 - Pages: 32

Summaries for Accounting

...Chapter 7 and 8 Summaries Chapter 7 goes into accounting for receivables. It starts by explaining that Accounts Receivable are amounts due from customers for credit sales. Accounts Receivable occur from credit sales to customers. For sales on credit, they are recorded by increasing, or debiting, Accounts Receivable. A supplementary record, called the accounts receivable ledger, is created to maintain a separate account for each customer. A supplementary record, called the accounts receivable ledger, is created to maintain a separate account for each customer. To record a credit sale, one must debit Accounts Receivable—Customer Name, and credit Sales. The debit is posted to the Accounts Receivable account in the general ledger and to the customer account in the accounts receivable ledger. Many larger retailers maintain their own credit cards to grant credit to preapproved customers and to earn interest on unpaid balances. For credit card sales, sellers allow customers to use third-party credit and debit cards for several reasons: the seller does not have to make decisions about who gets credit and how much the seller avoids the risk of extending credit to customers who do not pay, the seller typically receives cash from the credit card company sooner than had it granted credit directly to customers, and a variety of credit options for customers offers a potential increase in sales volume. To make an entry for credit card sales when cash is received upon deposit of sales......

Words: 2939 - Pages: 12

Financial Accounting

...SOM 630 FINANCIAL ACCOUNTING End-of–Course Project Fall 2010 Semester After you have chosen a company and obtained a copy of its published financial statements, please answer the questions posed below in the spaces provided. If you cannot answer a given question, please explain why not (data not available, you do not understand the question, etc.).  Are the financial statements consolidated financial statements? How do you know? Yes. It says "Consolidated "Consolidated "Consolidated "Consolidated  so in the titles of each of the statements. Balance Sheets" Statement of Operations" Statement of Changes in Stockholders' Equity" Statement of Cash Flows" Are the financial statements comparative financial statements? What periods (years) are presented? Yes. They compare the periods ending 03Jan2009 & 02January2010. They also show a period from 06Feb2007 - 29Dec2007 & then a short period (31Dec2006 - 05Feb2007) before the company had been purchased by the current owners.  The first footnote is probably labeled “Summary of Significant Accounting Policies”. What do you think is the main objective of this footnote? This was actually the second footnote (the first was titled "Nature of Business").  If the company has inventory, what cost flow assumption are they using (FIFO, LIFO, etc)? How do you know? This company currently uses FIFO (the company's predecessor had used LIFO). They tell me this in the second footnote titled "Summary of Significant......

Words: 689 - Pages: 3

Financial Accounting

... | |Business |10. Financial Accounting and Reporting | |Student name |Assessor name | | |Mehreen Bakht Haroon | |Date issued |Completion date |Submitted on | |15th July 2014 |15th August 2014 | | |Assignment Title |Financial statements interpretation and reporting | |Learning |Learning |Assessment |In this assessment you will have the opportunity to |Task |Evidence | |Outcome |Outcome |Criteria |present evidence that shows you are able to: |No. |(Page no.) | | | |1.2 |explain the legal and regulatory influences on |7 | | | | | |financial | | | | ...

Words: 2594 - Pages: 11

Financial Accounting

...TABLE OF CONTENTS * Executive Summary 2 * Introduction 3 * Cash Budget 3 * Operating Budget 3 * Budgeting Administration 4 * Behavioural Aspect of Budgeting 4 * Participative Budgeting 5 * Top Down Process 6 * Bottom up Process 6 * Budgetary Slack 6 * Frequent feedback on Performance 7 * Monetary and Nonmonetary Incentives 7 * Realistic Standards 8 * Controllability of Costs 8 * Multiple Measures of Performance 8 * Conclusion 8 * References 9 Executive Summary: The following Accounting report contains information related to budgets, different types of budgets and how this all leads to change in different aspect of human behaviour. The objective of this report is to promote a reasonable amount of positive behaviour in an organization. There are five factors which are being discussed in this report, Participative budget, and frequent feedback on performance, Monetary and Nonmonetary incentives, Realistic Standards, Controllability costs. Under participative budget there are two levels of management the first one is top level management and the second is bottom level management. Participative budget also creates a slack which is known as budgetary slack for management. ......

Words: 2060 - Pages: 9

Financial Accounting

... ACCOUNT CLASSIFICATION AND PRESENTATION Account Title Accounts Payable Accounts Receivable Accumulated Depreciation—Buildings Accumulated Depreciation—Equipment Advertising Expense Allowance for Doubtful Accounts Amortization Expense Bad Debt Expense Bonds Payable Buildings Cash Common Stock Copyrights Cost of Goods Sold Debt Investments Depreciation Expense Discount on Bonds Payable Dividend Revenue Dividends Dividends Payable Equipment Freight-Out Gain on Disposal of Plant Assets Goodwill Income Summary Income Tax Expense Income Taxes Payable Insurance Expense Interest Expense Interest Payable Interest Receivable Interest Revenue Inventory Classification A Current Liability Current Asset Plant Asset—Contra Plant Asset—Contra Operating Expense Current Asset—Contra Operating Expense Financial Statement Balance Sheet Balance Sheet Balance Sheet Balance Sheet Income Statement Balance Sheet Income Statement Income Statement Balance Sheet Balance Sheet Normal Balance Credit Debit Credit Credit Debit Credit Debit Debit Credit Debit Debit Credit Debit Debit Debit Debit Debit Credit Debit Credit Debit Debit Credit Debit (1) Debit Credit Debit Debit Credit Debit Credit Debit B Operating Expense Long-Term Liability Plant Asset C Current Asset Stockholders' Equity Intangible Asset Cost of Goods Sold Balance Sheet Balance Sheet Balance Sheet Income Statement Balance Sheet Income Statement Balance Sheet Income Statement Retained Earnings Statement Balance Sheet......

Words: 56249 - Pages: 225

Financial Accounting Summary

...lOMoARcPSD Exam 28 March 2013 FINANCIAL ACCOUNTING FOR INTERNATIONAL BUSINESS Income Statement = Total revenues of a company minus the company’s total expenses during a certain so-called accounting period. NET INCOME = REVENUES – EXPENSES Income Statement Revenues -Expenses =Net Income Revenues = increases in stockholder’s equity resulting from selling goods, rendering services, or performing other business activities. Expenses = decreases in stockholders’ equity resulting from the cost of selling goods or rendering services and the cost of the activities necessary to carry on business. Statement of Retained Earnings = this statement shows any changes in the ‘retained earnings. Statement of Retained Earnings Opening Balance +Net Income -Dividends =Retained Earnings Retained earnings = the profits of previous years’ which were not paid to the shareholders but stayed in the company. Balance sheet = shows the financial position of a company on a certain day. Balance Sheet Assets Liabilities Equity A=L+E ASSETS = LIABILITIES + STOCKHOLDERS’ EQUITY Statement of Cash Flows = the in- and outflows of cash in a company. Statement of Cash Flows Opening Balance +Investing Activities +Financial Activities =Change in Cash +Starting Balance =Ending Cash Balance Profitability = can you hold and attract investment capital? Liquidity = do you have enough cash to pay your debts when they are due? 1 Distributing prohibited | Downloaded by Peter......

Words: 1831 - Pages: 8

Accounting Summary

...SHAREHOLDER’S EQUITY * Owner’s equity section of a corporation’s statement of financial position; 2 major components – share capital and retained earnings. * SHARE CAPITAL – amount of resources received by a corporation as a result of investment by shareholders, donations or other share capital transactions * RETAINED EARNINGS – amount of capital accumulated and retained through the profitable operations of the business. SHARE CAPITAL * Shares to be subscribed and paid in or secured to be paid in by shareholders, either in money, property or services, at the time of organization of the corporation or afterwards, and upon it’s to conduct its operations Divided into – legal capital and share premium * LEGAL CAPITAL – capital contributed by shareholders comes from the sale of shares of stock * In case of par value shares – legal capital is the aggregate par value of all issued and subscribed shares * In case of no-par shares – legal capital is the total consideration received by the corporation for the insurance of its shares to the shareholders * SHARE PREMIUM (ADDITIONAL PAID-IN CAPITAL) – portion of the paid-in capital representing amounts paid by shareholders in excess of par. TWO BASIC TYPES OF SHARES: SHARES OF STOCK * Represents the interest of right of a shareholder in a corporation and is evidenced by a certificate of stock; includes all types of ownership shares Basic types of share capital – ordinary share and preference share. *......

Words: 1584 - Pages: 7

Financial Accounting

...Financial Accounting Standards Board ORIGINAL PRONOUNCEMENTS AS AMENDED Statement of Financial Accounting Standards No. 157 Fair Value Measurements Copyright © 2010 by Financial Accounting Foundation. All rights reserved. Content copyrighted by Financial Accounting Foundation may not be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the Financial Accounting Foundation. FAS157 Statement of Financial Accounting Standards No. 157 Fair Value Measurements STATUS Issued: September 2006 Effective Date: For financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years Affects: Amends APB 21, paragraphs 13 and 18 Deletes APB 21, footnote 1 Amends APB 28, paragraph 30 Amends APB 29, paragraphs 18 and 20(a) Deletes APB 29, paragraph 25 and footnote 5 Amends FAS 13, paragraph 5(c) Amends FAS 15, paragraphs 13 and 28 Deletes FAS 15, footnotes 2, 5a, and 6 Amends FAS 19, paragraph 47(l)(i) Amends FAS 35, paragraph 11 and footnote 5 Deletes FAS 35, footnote 4a Amends FAS 60, paragraph 19 Deletes FAS 60, footnote 4a Amends FAS 63, paragraphs 4, 8, and 38 through 40 Amends FAS 65, paragraphs 4, 6, 9, 10, 12, and 29 Amends FAS 67, paragraphs 8 and 28 Deletes FAS 67, footnote 6 Amends FAS 87, paragraphs 49 and 264 and footnote 12 Deletes FAS 87,......

Words: 59304 - Pages: 238

Financial Accounting

...Financial Accouting EXECUTIVE SUMMARY Accounting for intangible assets is a major issue within the accounting environment. The issue is identifiable when it concerns accounting for research and development costs, in particular, internally generated assets. With two imperative standards in practice today, one being the IASB’s selective capitalisation of expenses into an intangible asset once a specific criteria has been reached and the other being the FASB’s system of straight expensing of all expenditure. This subject plays a vital role in the accounting world due to the large amount of money invested into research and development activities, with the Australian Bureau of Statistics 2010 reporting that Business expenditure on R&D (BERD) in Australia alone increased 15% to $14, 380 million up from 07-08. In discussing the different styles taken by the Boards it is easier to identify the impact these standards have on a corporation and its performance, with particular reference being made to Clinuvel Pharmaceuticals Limited, an Australian listed company that is currently undertaking research and development to develop a UV medical protection of the skin from UV and light for sun-related ailments. 1. Clinuvel Activities of R&D Clinuvel Pharmaceuticals Limited (CUV) is a listed Australian biopharmaceutical company based in Melbourne. The focus of CUV is to further research and develop, and eventually commercialise, its leading drug candidate afamelanotide as “a......

Words: 2203 - Pages: 9

Accounting Summary

...Account Summary Report BUS 599 Accounting Summary Report T&T Lemonade stand consists of twin-sisters who decided to enter into a partnership by investing initial capital of $20.00 each to sell sparkling fresh, ice cold, lemonade to drink during blistering hot summer days in Florida. One of the twins, Tayshah came up with the idea and it has flourished into a prosperous adventure. They started their endeavor with a vision and determination, began from scratch, and in just short period turned their initial capital into a profitable business. This report provides information regarding the first six days of business for season one. This report consists of a journal, which provides a detail account of all financial transactions starting with day one and ending at day six, an income statement, which reports revenues and earnings, less the expenses incurred within a six-day period, and a balance sheet that explains the assets equal to liabilities plus equity. Journaling A journal gives a complete record of each transaction in one place, day to day and shows debits and credits for each transaction (Wild, Shaw, Chaippetta, 2010). Transactions started with the initial capital of $40.00 from Tayshah &Teighlor, twin sisters, owners and the total debits and credits of $406.60. This journal provides a chronological order by date totaling six-days. The journal capture revenues earned during the cash sales from the lemonade stand, debits for equipment and......

Words: 642 - Pages: 3

Financial Accounting

...Financial Accounting: Basic Accounting Concepts: (The Income Statement) This chapter introduces the idea of income as used in financial accounting, and describes the income statement. Course of discussion outline: The last six basic concepts namely the following: 6. Time period 7. Conservatism 8. Realization 9. Matching 10. Consistency 11. Materiality The nature of income Now let us first differentiate the balance sheet and income statement, balance sheet described were which reports the financial condition of an entity as of one moment in time while the income statement described were which summarizes the result of operation for a period of time. Therefore a flow report, as contrasted with the balance sheet, which is a status report. Financial statement can be illustrated in two ways in which any entity can be described, whether it be a business, a human body, or the universe: 1.) in terms of flow through time 2.) in terms of the its status or state as of one moment of time Flows in a business are continuous (see diagram below) Selling Activities Collection Activities Purchasing or Production Activities Financial Accounting: Basic Accounting Concepts: (The Income Statement) There are three commonly types of businesses, namely merchandising, service oriented, and manufacturing. In all of these three types of businesses the income statement focuses on the section the flow diagram is labelled selling activities. In selling activities......

Words: 2877 - Pages: 12