AFM131 Lecture Notes - Lecture 8: Accounting Equation, Accounts Payable, Investment

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM131
• Professor: Mohsin Bashir

Document Summary

Accounting: recording and interpreting financial transactions to get the information needed to make good decisions (can be managerial; inside or financial; outside) Annual report: yearly statement to show financial condition, progress, expectations. Public accountant: provides services to others for a fee. Independent audit: unbiased opinion about the accuracy of financial statements. Certified internal auditor: bachelors + 2yrs experience + certificate. Tax accountant: trained in tax law, returns, and strategies. Government and non-profit accounting: accounting to serve others according to a budget. Costs of goods sold/manufactured: cost of merchandise sold/used for resale. Gross profit margin: how much earnings by buying/selling merchandise. Operation expenses: costs in operating a business (rent, salary) Depreciation: write off of the cost of a tangible asset over its estimated useful life. Accounting cycle: 6 step procedure to prepare the analysis of financial statements. Journal: record where accounting data is first entered (can be double entry; written in 2 places)