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
