Exam (elaborations)
Burney ACCY 201 FINAL (Ole Miss) (1)
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Burney ACCY 201 FINAL (Ole Miss) (1)
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Accounting Definition - ✅✅ -An information and measurement system thatidentifies, records, and communicates relevant, reliable, and comparable
information.
Types of Users of accounting info. - ✅✅-External and Internal Users
External Users - ✅✅ -NOT directly involved in running the organization
> Includes; shareholders, lenders, directors, customers, suppliers, regulators,
lawyers, brokers, and the press
Internal Users -✅✅ -ARE directly involved in managing and operating an
organization
> Includes; CEOs, CFOs, CAEs, Treasurer, ETC.
GAAP - ✅✅ -Generally Accepted Accounting Principles
> Aims to make information relevant, reliable, and comparable
> Concepts that govern accounting
Full Disclosure Principle - ✅✅ -A company must report details behind financial
statements that would impact users' decisions
Expense Recognition Principle - ✅✅ -A company must record the expenses it
incurred to generate the revenue reported
Revenue Recognition Principle - ✅✅-Provides guidance on when a company must
recognize revenue
Sole Proprietorship - ✅✅-A business owned by one person
Partnership - ✅✅-Two owners
Business Entity Applies
Corporation -✅✅-Business is a separate legal entity
Accounting Equation - ✅✅-Assets= Liability + Equity
Increases Equity - ✅✅-Revenues and Owners Investments (c/s)
Decreases Equity - ✅✅-Dividends and Expenses
Income Statement - ✅✅-revenues - expenses = net income
Statement of Retained Earnings - ✅✅-beginning retained earnings + net income -
dividends = ending retained earnings
, Balance Sheet - ✅✅-Types and amounts of assets, liabilities, and equity at a
period in time
Assets - ✅✅ -Something you own.
> Cash, A/R, N/R, Prepaid Accounts, Supplies Accounts, Equipment, Building, and
Land Accounts
Liabilities -✅✅ -Something you owe.
> A/P, N/P, Unearned Revenue, and Accrued Liabilities
✅✅-=C/S - Dividends + Revenues - Expenses
Equity -
Revenue Accounts - ✅✅-Increase Equity
> Sales, Commissions Earned, Professional Fees Earned, Rent Revenue, and
Interest Revenue
Expense Accounts - ✅✅ -Decrease Equity
> Ad., Store Supplies, Office salaries, office supplies, rent, utilities, and insurance.
Debits - ✅✅ -On the left
> Assets, Dividends, and Expenses
Credits - ✅✅ -On the right
> Liabilities, Common Stock, and Revenue
Journal Entry - ✅✅-Shows debits and credits for each transaction
Posting - ✅✅-The process of transferring journal entry information to the general
ledger
Trial Balance - ✅✅ -The total debit balance has to equal credits
> List each title and its amount
> Compute total debits/ credits balances
> Verify that the totals are correct and equal
Deferred Revenues - ✅✅ -Unearned Revenues
> Refers to cash received in advance of providing products and services
Deferred Expenses - ✅✅ -Prepaid Expenses
> Items paid for in advance of receiving their benefits.
Accrued Expenses - ✅✅-Costs that are incurred in a period but are both unpaid
and unrecorded
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