Financial statement (lecture)

  • 16 марта 2011 г.
  • 393 Слова
Accounting is
the information system that measures business activities,
processes that information into reports and financial statements,
and communicates financial information to decision makers.Users of Accounting Information
Taxing Authorities
Not-for-Profit entities
Types of Accounting
Financial accounting
Information for users outside the firme.g. investors, creditors, governments
Managerial Accounting
Information for internal users
e.g. managers, other internal decision makers
Accounting Principles and Concepts
Financial AccountingStandards Board (FASB) establishes GAAP
GAAP – Generally Accepted Accounting Principles
GAAP is derived from the conceptual framework
Conceptual Framework
Accounting provides information useful fordecision making
To be useful, information must be
Relevant – able to influence a decision
Reliable – verifiable, free of Bias and represent faithfulness
Comparability – can be compared withdifferent companies
Consistency – can be compared from one period to the next
Concepts and Principles
The Entity Concept
The Cost Principle
The Going Concern Concept

The Monetary-UnitConcept
The Revenue Principle
The Matching Principle

The Periodicity Principle
The Conservatism Principle
The Materiality Principle
Financial Statements
Income Statement
How well did the companyperform during the period?
Statement of Retained Earnings
Why did the company’s retained earnings change during the year?
Balance Sheet
What was the company’s financial position on the last day ofthe period?
Statement of Cash Flows
How much cash did the company generate and spend during the year?
Income Statement
Two main categories on the Income Statement
Revenues and Gains
Expenses andLosses
Statement of Retained Earnings
Balance Sheet
Items are listed within each category in order by liquidity, with the most liquid listed first.
Investments / Assets
Current Assets...
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