This document provides an overview of financial accounting and the business environment. It defines accounting as an information system that provides essential financial data to help various groups make informed decisions. It also distinguishes between financial accounting for outsiders and managerial accounting for insiders. Additionally, it describes the four basic financial statements - the income statement, statement of owner's equity, balance sheet, and statement of cash flows - and explains what each reports. Finally, it outlines different business structures like proprietorships, partnerships, and corporations.
This document provides an overview of financial accounting and the business environment. It defines accounting as an information system that provides essential financial data to help various groups make informed decisions. It also distinguishes between financial accounting for outsiders and managerial accounting for insiders. Additionally, it describes the four basic financial statements - the income statement, statement of owner's equity, balance sheet, and statement of cash flows - and explains what each reports. Finally, it outlines different business structures like proprietorships, partnerships, and corporations.
This document provides an overview of financial accounting and the business environment. It defines accounting as an information system that provides essential financial data to help various groups make informed decisions. It also distinguishes between financial accounting for outsiders and managerial accounting for insiders. Additionally, it describes the four basic financial statements - the income statement, statement of owner's equity, balance sheet, and statement of cash flows - and explains what each reports. Finally, it outlines different business structures like proprietorships, partnerships, and corporations.
Environment Pamela Gonzalez, MBA Accounting and the Business Environment Accounting Information system that provides essential information about the financial activities of a business entity to various individuals or groups for their use in making informed decisions. Financial Accounting Outsiders Managerial Accounting Insiders Accounting and the Business Environment Business Set goals and measure them
Investors Analyze potential earnings and performance
Creditors Ability to make the loan payments
Taxing Authorities Figure income tax
CPA Certified Public Accountans (serve general public)
CMA Certified Management Accountants (work for single company)
Financial Statement s Accounting and the Business Environment SEC FASB PCAOB --AICPA -- IMA US Financial Markets Accounting Standards Guidelines Accounting and the Business Environment Proprietorship Partnership Corporation LLP/LLC Not-for-profit One Owner
Limited life
Propietor is personally liable Two or more Owners
Limited life
Partners are personally liable Many Owners (stockholders)
Unlimited life
Stockholders not personally liable Members
Unlimited life
Members not personally liable None
Unlimited life
Fiduciary liability Accounting and the Business Environment PROPRIETORSHIP Separate legal entity
No continuous life or transferability of ownership
Unlimited liability of owner
Unification of ownership and management
Business taxation
Government regulation Accounting and the Business Environment GAAP (Generally Accepted Accounting Principles)
Entity Concept Faithful Representarion Principle Cost Principle Going Concern Principle Stable Monetary Unit Concept One business separate from its owners Data faithfully represents the measurement or description of that data Assets and services should be recorded at their actual cost (amount paid). Will remain in operation for the foreseeable future Stable currency buying power Accounting and the Business Environment Assets Liabilities Equity Everything the business owns that has value Everything the business owes Net worth Revenues Expenses Drawings Accounting and the Business Environment Assets Liabilities Equity Transactions affect what the company owns, owes or its net worth 1. The e-learning agency received $30,000 cash and gave capital to Sheena Bright. 2. Paid $20,000 cash for land. 3. Bought $500 of office supplies on account. 4. Received $5,500 cash from clients for service revenue earned. 5. Performed services for clients on account, $3,000. 6. Paid cash expenses: computer rent, $600; office rent, $1,100; employee salary, $1,200; utilities, $400. 1. Paid $300 on the account payable created in transaction 2. Bright buys $200 of groceries. This is not a transaction of the business. 3. Collected $1,000 on the account receivable created in transaction 4. Sold land for cash at its cost of $9,000. 5. Owner withdrew cash of $2,000.
Income Statement Statement of Owners Equity Balance Sheet Statement of Cash Flow Accounting and the Business Environment Income Statement Statement of Owners Equity Balance Sheet Statement of Cash Flow Statement of Earnings or Statement of Operations
Presents a summary of revenues and expenses for a period of time; it tells us whether the business enjoyed net income or suffered net loss. Accounting and the Business Environment Income Statement Statement of Owners Equity Balance Sheet Statement of Cash Flow Shows the changes in capital for a business entity during a time period, such as month, quarter, or year. Accounting and the Business Environment Income Statement Statement of Owners Equity Balance Sheet Statement of Cash Flow Statement of financial position
Lists a business entitys assets, liabilities and owners equity as of a specific date, usually the end of a month, quarter or year. Accounting and the Business Environment Income Statement Statement of Owners Equity Balance Sheet Statement of Cash Flow Reports the cash coming in and the cash going out during a period. Business activities result in a net cash inflow or a net cash outflow.
"The Language of Business: How Accounting Tells Your Story" "A Comprehensive Guide to Understanding, Interpreting, and Leveraging Financial Statements for Personal and Professional Success"