ACC 101 Ch 1

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alexbura
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196028
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ACC 101 Ch 1
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2013-01-30 23:47:36
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Accounting Chapter 1
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  1. What is a Balance Sheet (p.13) ?

    Must Describe Header!

    As well as the template of a balance sheet.
    A financial statement that reports the assets and claims to those assets at a specific point in time.

    • Balance Sheet Header:
    • SIERRA CORPORATION
    •      Balance Sheet
    •    October 31, 2012

    • Balance Sheet Template:
    • Revenues
    • Expenses
    •    Cost of goods sold
    •    Selling, marketing, and adminstrative expenses:
    •    Income tax expense
    •    Total Expenses
    • Net Income


    A balance sheet is also known as a "A Statement of Financial Position"

    The Balance Sheet is used to inform the user of what the business owns and what it owes

    The definition of the balance sheet is assets=liabilities+net worth. If the company decided to liquidate, it would need to sell its assets and pay off its liabilities. The resulting balance, or assets-liabilities=net worth, is the amount remaining to be distributed to its shareholders and other owners. The company is worth the value of all of the assets after all of its obligations have been settled, so total assets equal total liabilities.

    Read more: Why Do Assets Always Equal Liabilities on a Balance Sheet? | eHow.com 

    http://www.ehow.com/info_8262105_do-equal-liabilities-balance-sheet.html#ixzz2JL1vSeFh
  2. What is a Corporation (P.4) ?
    A business organized as a separate legal entity having ownership divided into transferable shares of stock

    A business owned by stockholders.
  3. Common Stock (p.9)
    Common Stock is a term used to describe the total amount paid in by stockholders for the shares they purchase

    • Wikipedia:
    • Common stock is a form of corporate equity ownership, a type of security. The terms "voting share" or "ordinary share" are also used in other parts of the world; common stock being primarily used in the United States.It is called "common" to distinguish it from preferred stock. If both types of stock exist, common stock holders cannot be paid dividends until all preferred stock dividends (including payments in arrears) are paid in full.In the event of bankruptcy, common stock investors receive any remaining funds after bondholders, creditors (including employees), and preferred stock holders are paid. As such, such investors often receive nothing after a bankruptcy.On the other hand, common shares on average perform better than preferred shares or bonds over time.[1]Common stock usually carries with it the right to vote on certain matters, such as electing the board of directors. However, a company can have both a "voting" and "non-voting" class of common stock.Holders of common stock are able to influence the corporation through votes on establishing corporate objectives and policy, stock splits, and electing the company's board of directors. Some holders of common stock also receive preemptive rights, which enable them to retain their proportional ownership in a company should it issue another stock offering. There is no fixed dividend paid out to common stock holders and so their returns are uncertain, contingent on earnings, company reinvestment, efficiency of the market to value and sell stock.[2]Additional benefits from common stock include earning dividends and capital appreciation.
  4. What is a Certified Public Accountant 

    also known as a "CPA"
    A CPA is an individual who has met the studied accounting and is certified to perform audits of corporations.
  5. What are Dividends (p.9)
    Payments of cash from a corporation to its stockholders

    Wikipedia:

    When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be distributed to shareholders. There are two ways to distribute cash to shareholders: share repurchases or dividends.[2][3] Many corporations retain a portion of their earnings and pay the remainder as a dividend.A dividend is allocated as a fixed amount per share. Therefore, a shareholder receives a dividend in proportion to their shareholding. For the joint stock company, paying dividends is not an expense; rather, it is the division of after tax profits among shareholders. Retained earnings (profits that have not been distributed as dividends) are shown in the shareholder equity section in the company's balance sheet - the same as its issued share capital. Public companies usually pay dividends on a fixed schedule, but may declare a dividend at any time, sometimes called a special dividend to distinguish it from the fixed schedule dividends.
  6. What is a "Net Income" (p.10)
    Net income is the amount by which revenue exceeds expenses.
  7. What are Retained Earnings (p.13)
    The amount of net income retained in the corporation.

    • TOOTSIE ROLL INDUSTRIES, INC.
    •      Retained Earnings Statement
    • For the Year Ended December 31,2009 (in thousands)

    • Retained earnings, January 1,2009
    • Add: Net income

    • Less: Dividends and other (net)
    • Retained Earnings, December 31,2009

    Wikipedia:

    In accounting, retained earnings refers to the portion of net income which is retained by the corporation rather than distributed to its owners asdividends.
  8. Sarbanes - Oxley Act (p.8)
    Regulations passed by congress in 2002 to try to reduce unethical corporate behavior.
  9. Statement of Cashflows (p.15)
    A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time.
  10. Revenue (p.10)
    The increase in assets that result from the sale of a product or service in the normal course of business.
  11. Basic Accounting equation (p.13)
    Assets = Liabilities + Stockholders Equity
  12. Stockholders Equity (p.13)
    The owners' claim to assets.

    Wikipedia

    Stockholders Equity= Total Liabilities - Total Assets

    Stockholders Equity is also known as "Shareholders Equity"
  13. Liabilities (p.9)
    The debts and obligations of a business  Liabilities represent the amounts owed to creditors.
  14. Management discussion and analysis (MD&A) (p.19)
    A section of the annual report that presents management's views on the company's ability to pay near-term obligations, its ability to fund operations and expansions, and its results of operations.
  15. Income Statement (p.22)

    Must know the Header!!!

    as well as the template of a Income statement
    A financial statement that presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time.
  16. Expenses (p.10)
    The cost of assets consumed or services used in the process of generating revenues.
  17. Statement of Cashflows (p.15)
    A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time.
  18. Sole proprietorship (p.4)
    A business owned by one person
  19. Retained Earnings Statement (p.13)

    Must know Header

    As well as the Template for this sheet.
    A financial statement that summarizes the amounts and causes of changes in retained earnings for a specific period of time.

    • TOOTSIE ROLL INDUSTRIES, INC
    •              Income Statement
    • For the Year Ended December 31, 2009 (in thousands)
  20. Partnership (p.4)
    A business owned by two or more persons associated as partners.
  21. Notes to the financial statements (p.19)
    Notes that clarify information presented in the financial statements, as well as expand upon it where additional detail is needed.
  22. Net Loss (p.10)
    The amount by which expenses exceed revenues.
  23. Assets (p.9)
    Resources owned by a buisiness.
  24. Auditor's report (p.19)
    A report prepared by an independent outside auditor stating the auditor's opinion as to the fairness of the presentation of the financial position and results of operations and their conformance with generally accepted accounting standards.
  25. Accounting (p.5)
    The information system that identifies, records, and communicates the economic events of an organization to interested users.
  26. Annual report (p.19) 
    A report prepared by corporate management that presents financial information including financial statements, notes, a management discussion and analysis section, and an independent auditor's report.

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