EOPA Financial Accounting

EOPA Financial Accounting Basic Accounting Equation assets= liabilities + stockholders' equity Assets -own -debit -economic resources presently controlled by the company that have measurable value and are expected to benefit the company by producing cash inflows or reducing cash outflows in the future (cash, supplies, furniture, equipment) Liabilities -owe -credit -measurable amounts that the company owes to credits (notes payable -loans, accounts payable) Stockholders' equity -investments and retained earnings -credit owners' claim to the business resources (common stock and retained earning) Net Income Revenues-expenses =net income Revenues -earned -credit -sales of goods or services to customers. they are measured at the amount the business charges the customer Expenses -incurred -debit -The costs of doing business necessary to earn revenues, including wages to employees, advertising, insurance, utilities and supplies used in the office Dividends distributions of a company's earning to its stockholders as a return on their investment (common stock and retained earnings: rev-expenses) Income statement The unit of measure assumption states that results of business activities should be reported in an appropriate monetary unit ( rev-exp.) Balance sheet Reports at a point in time: assets, liabilities, stockholders' equity. Assets= liabilities +stockholders' equity Cash Flow Statement summarizes how a business's operating, investing, and financing activities caused its cash balance to change over a particular period of time fraud generally defined as an attempt to deceive others for personal gain. corruption, asset misappropriation, financial statement fraud The Sarbanes Oxley Act (SOX) Contract incentives: stiff fines and prison terms. Reduce opportunities: internal control evaluation independent audit committee. encourage honesty: tip lines, whistleblower protection, ethic code bank reconciliation goals -Identify the deposits in transit. -Identify the outstanding checks. -Record other transactions on the bank statement and correct your errors. inventory The merchandiser's total cost of acquiring goods that it has not yet sold sales revenue Total selling price of all goods that the merchandiser did sell to customers