Nguyên lý kế toán - Chapter 1: Business decisions and financial accounting

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinChapter 1Business Decisions and Financial AccountingPowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Fred Phillips, Ph.D., CAOrganizational FormsSole ProprietorshipBusiness organization owned by one person. The owner is personally liable for all debts of the business.1-3The Accounting SystemBusiness and Financing ActivitiesAccountingSystemAccounting ReportsFinancialManagerialExternal users(creditors, investors, etc.)Internal users(managers, etc.)Run the companyEvaluate the companyAccounting is a system of analyzing, recording, summarizing and reporting the results of a business’s activities.1-4The Basic Accounting EquationResources Owned . . .by the company Resources Owed . . . to creditors to stockholdersSeparate Entity AssumptionRequires that a business’s financial reports include only the activities of the business and not those of its stockholders. Assets = Liabilities + Stockholders’ Equity1-5AssetsResources controlled by the company that have measurable value and are expected to provide future benefits to the company.CashSuppliesFurnitureEquipment1-6LiabilitiesAmounts owed by the business to creditors.Notes PayableAccounts Payable1-7Stockholders’ EquityOwners’ claim to the business resources.Stock CertificateContributed CapitalRetained Earnings1-8Revenues, Expenses and Net IncomeRevenues – Expenses = Net Income1-9DividendsDistributions of a company’s earnings to its stockholders as a return on their investment.Dividends are not an expense. 1-10Financial StatementsIncome StatementStatement of Retained Earnings Balance SheetStatement of Cash FlowsFinancial statements are typically prepared in this order.1-11The Income StatementReports the amount of revenues less expenses for a period of time.The unit of measure assumption states that results of business activities should be reported in an appropriate monetary unit.1-12The Statement of Retained EarningsReports the way that net income and the distribution of dividends affected the financial position of the company during the period.1-13The Balance SheetReports at a point in time:What a business owns (assets).What it owes to creditors (liabilities).What is left over for the owners of the company’s stock (stockholders’ equity).BASIC ACCOUNTING EQUATIONAssets = Liabilities + Stockholders’ Equity1-14The Statement of Cash FlowsSummarizes how a business’s operating, investing, and financing activities caused its cash balance to change over a particular period of time.1-15Relationships Among the Financial Statements Net income flows from the Income Statement to the Statement of Retained Earnings. 1 1-16Relationships Among the Financial Statements Ending Retained Earnings flows from the Statement of Retained Earnings to the Balance Sheet. 21-17Relationships Among the Financial Statements Cash on the Balance Sheet and Cash at End of Year on the Statement of Cash Flows agree. 31-18End of Chapter 1