Class notes
Accounting Notes
- Course
- Institution
Accounting Class Notes 2019
[Show more]
Seller
Follow
oanab
Content preview
FINANCIAL ACCOUNTING SUMMARYWhat is Accounting?
- Accounting as language of business
- Basic Accounting Theory:
a) focuses on decision usefulness for investors
facilitates investment decisions
provides information about amount/timing/uncertainty of future CFs
b) conceptual Framework
quantifies business activities:
maps economic events into financial statement
summarises transactions and economic event in simple terms
- where/for whom?:
a) Internal: look accurate (Managerial Accounting)
b) External: look good/profit (Financial Accounting, GAAP)
c) Government: look “poor”
GAAP and IFRS
GAAP (Generally Accepted Accounting Principles): standard framework of guidelines for FA
- Role: ensure that financial statements clearly present the economic condition and performance
of the company
- U.S.GAAP: pronouncements by FASB (financial accounting standard boards) statements
aggressive, rule-based, flexible in new situations
- German GAAP: pronouncements by HGB (the German Commercial Code)
very conservative, because most German companies finance their actions through
debt
IFRS (International Financial Reporting Standards): common global language for business affairs
neutral and principle-based
Principal Financial Statements: annual/quarterly reports to shareholders
- Balance sheet (left half: assets, right side: liabilities and equity; should be in balance; no revenue
or expenses)
Change in cash from previous year equals final cashflow number from Cashflow
Statement
- Income Statement (How much you won and lost (+,-,=), net income: retained earnings in
shareholders equity (BS))
Retained Earnings (end of period) = Retained Earnings (beg. of period) + net income
- dividends
- Statement of Cash Flows (In- and outflow: operating-, investing- & financing activities)
- Statement of changes in Shareholder’s Equity
, Balance Sheet
- Current assets/ non-current assets/ - liabilities:
Current assets: firm expects payment or receipt of assets within one year or
operating cycle
Non-current assets: “ in more than one year
- US GAAP vs IFRS:
US GAAP: from most liquid to least liquid
IFRS: from least liquid to most liquid
- Asset recognition (all must be met):
a) probable future economic benefit
b) entity owns/ controls the right to use the item (risks and rewards)
c) event that provides right to receive item has occurred
d) the future benefit can be measured/ quantified with sufficient reliability
- Liability recognition
a) require a probable future benefit transfer that the firm has little or no discretion to
avoid
b) represent a present obligation
c) are a result of a past transaction
d) are quantifiable with sufficient reliability
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller oanab. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $7.56. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
66579 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now