ACCT 200 1st Edition Lecture 1 Outline of Current Lecture I Types of Accounting II Forms of Business Organizations III Business Activities to Measure IV Basic Accounting Equation V Profitability VI Financial Statements Current Lecture Managerial acct deals with the methods accountants use to provide information to an organization s internal users that is its own managers Financial acct measures business activities of a company and communicates those measurements to external parties for decision making purposes Acct 200 is financial acct acct 210 is managerial acct Who needs acct information Investors creditors customers suppliers employees and managers tax authorities and regulators Forms of business organizations Sole proprietorship owned by a single person works for small operations that don t have a lot of risk Partnership owned by two or more persons e g dentists still pretty easy but slightly more risky Corporation legally separate from its owners We will focus on corporations Business activities to measure 1 Financing activities involves funding from external sources 2 Investing activities involves purchase and sale of long term resources restaurant oven tables cash register refrigerator etc 3 Operating activities involves transactions in primary operations of business BASIC ACCOUNTING EQUATION Assets liabilities stockholders equity Assets resources owned by the business cash accounts receivable land equipment supplies inventory Cash money in a checking account Accounts receivable money due from customers Supplies little things paper pencils Inventory things you sell the customers Liabilities debts owed to creditors accounts payable notes payable wages payable and unearned revenue Stockholders Equity owners claim to net value of company common stock retained earnings Profitability Revenue expenses net income then company can distribute dividends to investors Revenue expenses net loss Revenues the amounts earned from selling products or services to customers Expenses costs associated with running the business paying wages insurance rent etc Supplies on a balance sheet asset account supplies sitting in a cabinet waiting to be used Supplies expense supplies used up Revenue when earned provided a service for a customer sold an item to a customer they left with it work is completed for a customer provided a flight to the Bahamas for a customer not buying a ticket but actually transporting me is when the airline has revenue Expenses hired a repair crew to repair plumbing issue that was fixed At the end of each day a company has increased wage expense Communicating through financial statements financial statements are periodic reports published by the company for the purpose of providing information to external users Income statement financial statement that reports only the revenues and expenses over an interval of time shows whether the company was able to generate enough revenue to cover the expenses of running the business shows if there was a net profit or loss Statement of stockholders equity financial statement that summarizes the changes in stockholders equity over an interval of time consists of common stock retained earnings Retained earnings the cumulative profits of the business Balance sheet financial statement that presents the financial position of the company on a particular date summarized by basic acct equation assets liabilities stockholders equity Statement of cash flows financial statement that measures activities involving cash receipts and cash payments over an interval of time can be classified into three categories operating cash flows investing cash flows financing cash flows
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