This 23 page document contains all the lecture notes of the course Financial accounting, complete with theory, formulas and explanations. This summary is perfect for your finals, since it contains all the information.
Financial Accounting
(week 1)
Accounting is an information system that:
- measures business activities
- processes data into reports
- communicates results to people and organizations
Management accounting system
Generates info for internal decision makers (managers throughout organization)
It gives a detailed plan and continuous performance reports. It has no standards of
reliability.
Management vs Financial Acc
Different users = different of information needed
Main Areas of differences
● nature of report produced
● level of detail
● regulations
● reporting interval
● time orientation
● range & quality of information
Income statement, statement of stockholders equity, balance sheet and statement of
cash flows are the four basic financial statements.
Income statement
How well did the company perform during the year?
Income statement = profit & loss account
Focus on financial performance over a certain period.
Revenues = inflow of economic sources from operations
Expenses = outflow of economic sources from operations.
Balance sheet
What is the company’s financial position on December 31?
Balance sheet = statement of financial position at a certain point in time.
Assets = resources held by the business
Liabilities = claim on business assets by non-owners
Equity = claim on owner of business assets
Statement of Stockholders’ equity
How net income and dividends affect company’s financial position at December 31
Statement of Cash flows
How much cash did the company generate and spend during the year?
,The Annual report
Basic overview of the operational, financial and extraordinary performance of the
company.
It's over a specific period (normally 1 year)
Compared to previous periods (evolutions+comparisons)
Basically these are numbers and some notes, explaining these numbers
(week 2)
Balance sheet
Left hand side = Assets (economic resources)
, Right hand side = Liabilities + stockholder’s equity (sources of financing economic
resources.)
Both have to be equal to each other at all times!
Trade receivables zijn debiteuren, account receivables ook maar staan bij current
asset.
Trade payables = debt, crediteuren
Assets
An asset is a resource held by the business. You need an asset to run your
business. The business should own your asset.
Non-current assets (fixed assets): Intention of being used during multiple production
cycles rather than held for sale, expected to convert in cash >1 year, for example:
property,plant and equipment.
Current assets: cash and other assets expected to convert in cash <1 year, for
example: cash,inventory, etc.
Liabilities and equity
Liabilities: all claims, other than those of owners.
Notes (bank) ⇔ Accounts (suppliers)
- LT liabilities = Non-current liabilities (>12 months)
- ShT liabilities = Current liabilities (<12 months)
Stockholders equity: Claim of the owners on the business
Owners’ investment + accumulated sum of undistributed profits + all additional equity
investments.
Transaction analysis
1. What business activities cause changes in the balance sheet?
2. How do specific activities affect each balance?
3. How do companies keep track of balance sheet amounts?
Requirements: Faithful representation: the information should be complete, neutral
and free from error.
Assumption: going concern: states that business are assumed to continue to operate
into the foreseeable future.
Accounts records all changes in a particular assets, liability or equity during a period.
Account title
-----------------------------
Debit on the left l Credit on the right
Debit and credit are neutral terms, meaning either a decrease or increase.
Assets = liability + stockholders equity
Every transaction has 2 sides
1. Business gives something
2. Business receives something
Journal entry
Chronological record of the transactions = Journal
Three steps to book transactions
Voordelen van het kopen van samenvattingen bij Stuvia op een rij:
Verzekerd van kwaliteit door reviews
Stuvia-klanten hebben meer dan 700.000 samenvattingen beoordeeld. Zo weet je zeker dat je de beste documenten koopt!
Snel en makkelijk kopen
Je betaalt supersnel en eenmalig met iDeal, creditcard of Stuvia-tegoed voor de samenvatting. Zonder lidmaatschap.
Focus op de essentie
Samenvattingen worden geschreven voor en door anderen. Daarom zijn de samenvattingen altijd betrouwbaar en actueel. Zo kom je snel tot de kern!
Veelgestelde vragen
Wat krijg ik als ik dit document koop?
Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.
Tevredenheidsgarantie: hoe werkt dat?
Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.
Van wie koop ik deze samenvatting?
Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper joannamatos. Stuvia faciliteert de betaling aan de verkoper.
Zit ik meteen vast aan een abonnement?
Nee, je koopt alleen deze samenvatting voor €5,49. Je zit daarna nergens aan vast.
