UW-Milwaukee BUSADM 201 - Introduction to Financial Accounting (5 pages)

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BUS ADM 101 Lecture 1 Introduction to Financial Accounting Outline of Current Lecture II Accounting Process A Definition of Accounting III IV V VI Business Activities 3 Forms of Business Organization Four reports required by GAAP Users and Uses of financial information Current Lecture Accounting Process Accounting is a process used to record economic activities of an organization in order to generate reports for use by decision makers The Process Create a system to accomplish a specific task Use a Method to get uniform results The Goal is to assemble aggregate organize and analyze huge volumes of data Objective Many Rules U S Rules are created by the Financial Accounting Standards Board or FASB These rules are called GAAP or Generally Accepted Accounting Principles Keep in mind Companies whose stock is publically traded also must follow laws enforced by a U S agency named Securities and Exchange Commission SEC Note International Financial Reporting Standards IFRS and GAAP are close but not exactly the same Business Activities 3 types 1 Financing Activities These 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 Borrowing Creates Liabilities Debts owed to Creditors These are called notes or Bonds Payable Another liability created in operating business is Accounts Payable Issuing or selling stock creates Stockholders Equity Dividends are distributions of profit to owners on stock 2 Investing Activities Obtaining resources or assets needed to run a business Buildings Equipment etc Note There are other types of assets needed in operating the business ie Cash Inventory Supplies not used up etc 3 Operating Activities The Day to Day of running the Business Revenues are the increase in assets resulting from the sale of a product or service Expenses are the cost of assets consumed or service used in generating revenue Advertising cost of goods inventory sold paying employees etc