ACCT 201 - Chapter 1 Notes

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ACCT 201

08-17-2024

CH. 1 Notes

*Main 3 activities in accounting identify, record, communicate economic

events of an organization to interested users

ex. of economic events Sale of snack chips by pepsico.

managers who Plan,

users associated with out

individuals & organizations

organize,srun a business)

outside a company who want

financial information about the

Internal

company

External

(syppiers/bankers)

Marketing managers

Investors & creditors

Production supervisors

2 most common types

Finance Directors

company officers

Taxing authorities

customers

Labor unions

Regulatory agencies

An accountant follows certain standards in reporting financial information

For these to work: afundamental business concept must be present- - ethical behavior

Accounting Principles: FASB (Financial Accounting standards Board, SEC (sec-

urities & Exchange commission), IASB (International Accounting standards

Board), IFRS(International Financial Reporting standards

Two measurement principles used by GAAP (Generally Accepted Accounting

Principles): Historical cost Principle OR Fair valve Principle

Relevance $ faithful representation are 2 primary qualities that

make accounting information useful for design-making

Two main assumptions: monetary unit assumption & economic entity

Provide a foundation for the accounting Process

assumption

A business owned by one person=proprietorship

Acorporation=a business organized as a separate legal entity under

state corporation law having ownership divided into transferable shares

of stock

Basic accounting equation: Assets=Liabilities + stockhaders' Equity

The accounting equation applies to all economic entities regardless of

size, nature of business, or form of business organization.

g

# Each Expanded business transaction must have a dual effect on the accounting equation

accounting equation: Assets= 1 common