Acct

Accounting Principles and Business Transactions Cheat Sheet

by Thu (thuhuong) via cheatography.com/528/cs/227/

Accounting Principles Generally Accepted Accounting Principles (GAAP) allow investors and other users to compare one company to another. Financial Accounting Standards Board (FASB) has the primary responsibility for developing accounting principles and publishes Statements of Financial Accounting and Inter pretat ions of these standards. The Securities Exchange Commission (SEC), a US government agency, has authority over accounting and financial information for companies whose shares of stock are traded and sold to the public. SEC follows the FASB guidelines but may issue Staff of Accounting Bulletins to address accounting matters FASB did not include. International Accounting Standards Board issues Inter nat ional Financial Reporting Standards (IFRS) which is different from the FASB. They're working together to develop a set of worldwide accounting principles to facilitate investment and business in a global economy. Accounting Equation Assets Resources owned by a business: - cash - land - buildings - equipment Rights are divided into 2 types: - rights of the creditors (liabilities) - rights of the owners (owner's equity) Accou nting equation showing the relati onship among all 3 variab les: Asset = Liability + Owner's Equity Liabilities are shown before owner's equity because creditors have first rights to the assets. Accounting Concepts BUSINESS ENTITY CONCEPT Shows the economic data in an accounting system directly related to the business ONLY and does not include personal activities, properties and debts by the owner. A business entity can take the form of a propri eto rship, partnership, corpor ation or limitedli ability company (LLC). Proprietorship - own by one individual - easy and cheap to organize - resources are limited to owner - used by small businesses Partnership - own by two or more individuals - combined skills and resources Corporation...