ACCT 1201 Study Guide - Final Guide: Retained Earnings, Cash Flow, Net Income
6 Feb 2020
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Sec: legal authority that determines financial reporting in the us. Auditors: report fairness of financial statements presentation. Corporation vs. partnership: corporation and stockholders double taxation. Steps to assure accuracy: form bod audit committee, hire independent auditors. Retained earnings= incoming balance + (net income - dividends) Expenses: depreciation, expense, discount lost, cash short and over, loss. Net earnings: revenues - expenses - tax on income. Revenue recognition principle: revenue reported on income statement regardless of whether customer has paid or not. Balance sheet (for a period): reports assets, liabilities and se. Assets: cash, receivables, factors, pre-paid, depreciation, improvements, allowance, inventory. Stockholders equity: capital stock, retained earnings, dividends. Se and liabilities are the source of financing an entity"s assets. Net income to net cash flow from operations (unearned revenue) Separate entity assumption: business transactions separate from owners". Going concern: business will operate in the foreseeable future. Faithful representation: info provided in statements is complete, relevant, neutral.
