ACCT 200 1st Edition Lecture 2 Outline of Last Lecture I Types of Accounting II Stakeholders III Accounts and Financial Statements Outline of Current Lecture I Review II What is a Business III Forms of Business IV Cost Emphasis V Business Cycle VI Ethics Current Lecture I Review a Assets things owned by a business provide future value b Liabilities amounts owed to someone by a business c Equity ownership of a company d Revenues sales earned earned revenues e Expenses incurred used up assets f Dividends payment distributions of cash to stockholders NOT EXPENSES g Operating day to day activities short term less than 1 year h Investing long term stuff greater than 1 year i Financing ways to initially acquire capital for a company i Stock positive ii Debt negative b c this is a liability II What is a Business A business sells goods services to earn profit a Service Business provides services to customers hair salon plumbing company etc b Merchandising Business buys finished goods from suppliers and sells them to consumers Walmart Belk s etc c Manufacturer Business buys inputs and converts them into products Honda factory Apple etc III 4 Business Forms a Proprietorship not separate legal entity full liability b Partnership proprietorship with partners separate legal entity from partners but each general partner is responsible for other partner s actions IV V VI c Corporation can issue stock stock is not revenue separate legal entity d Limited Liability Company LLC cannot issue stock but typically raise more money than proprietorship ex Lawyers doctors etc Cost Emphasis a Low cost emphasis companies that offer acceptable quality for a bargain price Kia Hyundai Walmart b Premium Price Emphasis companies that offer exceptional quality for a little heavier price tag Lexus BMW Business Cycle a Financing attaining money to make your business run i Debt liability ii Capital stock b Investing acquiring assets with which to develop your company c Operating doing something with the money offering goods services Wage expense versus wages payable wage expenses are used up paid immediately in cash while wages payable are to be paid in the future Ethics a GAAP Generally Accepted Accounting Principles set of principles used in the United States by businesses b FASB Financial Accounting Standards Board the board that writes GAAP but they have no authority to enforce the rules c SEC Securities and Exchange Commission responsible for enforcement of rules for public U S companies public means you can buy their stock at New York Stock Exchange d IASB International Accounting Standards Board bridge international gap for these rules e GAAP concepts i Business entity concept owners separate from business ii Cost concept historical cost means purchase price iii Going concern will be in business indefinitely iv Matching concept match revenues with expenses v Objectivity concept everything objective shows what you actually paid for something vi Unit of measure ours is the U S dollar vii Accounting period concept keep times separate viii Adequate disclosure concept display enough info to make an accurate decision
View Full Document
Unlocking...