MGMT 200 Exam 1 Purdue Latest 2023 Graded A+

MGMT 200 Exam 1 Purdue Latest 2023 Graded A+ Assets ✔✔Debit(+) Credit(-), resources Liability ✔✔Debit(-) Credit(+), creditors claims Equity ✔✔Debit(-) Credit(+), owners claims Normal Balance Equation ✔✔Assets = Liab ...

MGMT 200 Exam 1 Purdue Latest 2023 Graded A+ Assets ✔✔Debit(+) Credit(-), resources Liability ✔✔Debit(-) Credit(+), creditors claims Equity ✔✔Debit(-) Credit(+), owners claims Normal Balance Equation ✔✔Assets = Liability + Equity Net income ✔✔(profit) = Revenues - Expenses Revenues ✔✔Sales of products or services to customers Expenses ✔✔Costs of selling products or services Dividends ✔✔Distribution of profit to stockholders Financing Activities ✔✔transactions the company has with investors and creditors (for borrowed money) Investing Activities ✔✔Transactions involving the purchase and sale of resources that provide benefit for several years Operating Activities ✔✔transactions that relate to the primary operations of the company Financial Reports ✔✔1. Balance Sheet 2. Income Statement 3. Statement of changes in equity 4. Statement of cash flows Storage Units ✔✔Classification as assets, liabilities, equity, revenues and expenses Income Statement ✔✔Reports revenues and expenses over an interval of time, assess the company's ability to earn a profit from running its operations Statement of Stockholders Equity ✔✔summarizes the changes in stockholders equity over an interval of time, =Common Stock + Retained Earnings Balance Sheet ✔✔Presents the financial position of the company on a particular date, Financial position: resources = claims to resources Statement of Cash Flows ✔✔measures activities involving cash receipts and cash payments over an interval of time Operating Cash Flows ✔✔cash transactions involving revenues and expenses Investing Cash Flows ✔✔cash transactions involving purchase and sale of long term assets Financing Cash Flows ✔✔cash transactions involving lenders and stockholders GAAP ✔✔Generally Accepted Accounting Principles FASB ✔✔Financial Accounting Standards Board SEC ✔✔Securities and Exchange Commission (governs FASB) IASB ✔✔International Accounting Standards Board Role of Auditors ✔✔help ensure that a mgmt applied GAAP in preparing the company's financial statements, helps investors and creditors by adding credibility to the financial statements Objectives of Financial Accounting ✔✔1. it is useful to investors and creditors in making decisions 2. helps predict cash flows 3. tells us about economic resources, claims to resources, and changes in resources and claims Assumptions that underlie GAAP ✔✔economic entity, monetary unit, periodicity, going concern Functions of Financial Accounting ✔✔1. measure business activities of a company (record transactions) 2. communicate measurements to external parties for decision making (prepare financial statements) Account ✔✔summary of all transactions related to a particular item over a period of time Asset Accounts ✔✔ex. cash, supplies, equipment and "on account" Liability accounts ✔✔ex. accounts payable, salaries payable, utilities payable, taxes payable, and "on account" Stockholders equity accounts ✔✔ex. Common stock and retained earnings Chart of Accounts ✔✔a list of all account names used to record transactions Retained Earnings equation ✔✔Revenues - Expenses - Dividends Normal Balance Rule ✔✔1. normal account balance 2. use the normal balance side to increase the account 3. use opposite side to decrease the account Journal ✔✔provides a chronological record of all transactions Journal Entry ✔✔format used for recording transactions (include a description of transaction) Posting ✔✔process of transferring the debit and credit information from the journal to individual accounts in the general ledger General Ledger ✔✔provides in a single location the list of transactions affecting each account and the account's balance Trial Balance ✔✔a list of all accounts and their balances at a particular date, shows that total debits equals total credits, assists in preparing adjusting entries, used for internal purposes only Revenue Recognition Priciple ✔✔revenues are recorded in the period in which the goods or services are provided to customers Matching Principle ✔✔also Expense Recognition, expenses are reported in the same period as the revenues they help generate Cash basis ✔✔not GAAP If revenue recognition is on accrual basis ✔✔when goods and services are provided to customers revenue recognition on cash basis ✔✔when cash is received Expense recognition on accrual basis ✔✔in the period costs are used to help produce revenues expense recognition on cash basis ✔✔when cash is paid Measurement Process ✔✔-periodicity -revenue recognition -matching concept -adjusting entries Prepaid expenses ✔✔pay cash to purchase an asset in the current period that will be recorded as an expense in a future period, costs are intially recorded as assets because they provide future benefit, adjusting entry: debit an expense account and credit an asset account Deferred Revenues ✔✔receive cash in the current period that will be recorded as a revenue in a future period, initially recorded as liability because there is an obligation to the customer, adjusting entry: debit a liability and credit a revenue Accrued Expenses ✔✔record an expense in the current period that will be paid in cash in a future period, cost is recorded as an expense and amount owed is recorded as a liability, adjusting entry: debit an expense account and credit a liability account Accrued Revenues ✔✔record a revenue in the current period that will be collected in cash in a future period, adjust entry: debit an asset account and credit a revenue account Adjusting Trial Balance ✔✔lists all account balances after updating them for adjusting entries, prepared after posting the adjusting entries to the general ledger Closing Entries ✔✔to transfer the balances of all temporary accounts to the balance of retained earnings, to reduce the balances of these temp accounts to zero to prepare them for the next period Post-Closing Trial Balance ✔✔lists all account balances after updating for closing entries, helps verify that closing entries were prepared and posted correctly and that the accounts are now ready for the next periods transactions