Introduction Income Statement: Sales Costs Expenses Net Income Stockholders: receive money Ford Motor: $4 per share Corporation: NI per share Ford: $1.50 per share Dividends: $100/4 = $10 per share Retained earnings: reinvest Chapter 1 Financial Accounting: For decision-makers outside the entity (investors, creditors, government agencies, the public) Managerial Accounting: For managers inside the entity (budgets, forecasts, projections) Corporation: Owners, provide long-term funds, pay corporate tax, stockholders elect board of directors Generally Aboplot Hounting Priceples Formataind by the Financial Standards Board) Accounting Assumptions and Paraples Entity Assum Assumphion-Ke Keep fream cather craputization econarnic individual sepaunte Continuing Awovemption-Entity will continue to cante for the future apeate Historical Coat Prreiple- Assets should be recorded at their actual cost on Ahe date of purchase. Stable-Monetary Un't Assumption- Assume the dollar's purchasing power is stable avex Hime... Acounting Equation Assets = Liabilites + Stockholders Equity my company Coach) Asset- provides a benefit to my com Labilites-amant a compo company oves andher party Stockholders Equity-Quirer daims interest in ces ceset Assets: Accounts receivable Prepaid expenses Inventory Property, plant, and equipment Liabilities: Accounts payable Long-term debt Accounts Receivable: Short-term credit are our company offers customers In about 30 days, our company will receive Current Asset (less than 1 year) "credit sale" "one on account" Accounts Payable: Short-term credit are our company owes another party In about 30 days, our company will pay Current Liability (less than 1 year) "purchase on account" Order of the Financial Statement: Income statement → Statement of retained earnings → Balance sheet → Statement of cash flows Retained Earnings: Net income - Dividends declared The amount of retained earnings kept for use in the business Retained Earnings Formula: Beginning retained earnings Net income (or net loss) Dividends declared = Ending retained earnings Balance Sheet: A point in time Income statement & SE: A period of time Balance Sheet: Assets, Liabilities, SE Current Assets: Expected to be used or converted to cash within one business cycle Ex: Prepaid expenses Long-term Assets: Expected to benefit the company beyond just the next fiscal year Ex: Long-term investments, intangible assets Current Liabilities: Debts due within one year Examples: Salaries payable, short-term notes payable, accounts payable, accrued liabilities Long-term Liabilities: Debts payable after one year Examples: Long-term notes payable, long-term bonds payable SE: Represents the stockholder's ownership of the business's assets Examples: Common stock, paid-in capital, retained earnings

ACCT Chapter 1

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