ACCTNG 2400 1st Edition Lecture 3Outline of Last Lecture I. What questions to ask before investinga. Financial healthb. Financial performanceII. Basic Accounting EquationIII. Different Creditors, investors, and external usersOutline of Current Lecture I. Assetsa. Types and examplesII. Liabilitiesa. Types and examplesIII. Equitiesa. Types and examplesCurrent LectureI. Assetsa. Cash - Cash, Bank account balancesb. Receivables - Accounts Receivable (amounts owed by customers for services or products sold to them)c. Supplies - Things typically used up in < 1 year in the course of doing business, likeoffice supplies, lubricants, fuels, etc.d. Inventory - Items held for sale to customers, like shoes (in a shoe store), canned goods (in a grocery store), or tanks of gasoline (in a gas station); can also be raw materials or partially-completed items in a manufacturing businessThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.e. Prepaid (expenses) - Operating expenses paid to suppliers in advance (before receiving services or products from them); common for insurance, rent, subscriptionsf. Equipment - Things typically used for > 1 year, like machines, vehicles, furniture, some tools, etc.g. Buildings - Buildings and related attachments … sometimes called “plants” or “factories”h. Land – Also called “property”II. Liabilitiesa. Payables – o Accounts payable (owed to suppliers), o Wages payable (owed to employees), o Notes Payable (debt principal owed to lenders), o Interest Payable (interest owed to lenders), o Taxes Payable (owed to governments); i. NOTE: any of these may be summarized into a single amount called something like “Various Expenses Payable”b. Unearned (revenues) - Operating revenues collected in advance of actually providing the service or product; also sometimes called “deferred revenues” 3 types of obligations in liabilitieso Formal obligation – borrowing (notes and interest payable)o Informal Obligations – Result of operating activities (owed to suppliers, employees, governments)o Obligation to provide goods or services in the future – “unearned revenue”III. Equities– the right of the company’s owner to whatever assets are left if all debts were paida. Contributed Capital - Money or other assets contributed by owners; for a corporation, this is usually done by buying shares of the company’s stockb. Retained Earnings - The accumulated profits earned by the business since it started, less any dividends it has distributed to owners since the business
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