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Overview And The Beginning Of Financial Statement Analyses

Managerial Accounting   Overview and the Beginning of Financial Statement Analyses


Objectives

By the end of this lesson, students should be able to:

     
  • State and understand the definition of accounting
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  • Identify and describe different classifications of accounting
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  • Understand the variety of professional services that accountants       provide.
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  • Understand what transactions are
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  • Understand the four principal financial statements and their basic       forms
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  • Define and manipulate the accounting equation
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  • Understand the terminology associated with financial statements
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  • Explain why financial statements are included in the corporation       annual report
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  • Define current assets and give examples
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  • Understand how short-term marketable securities are reported on the       balance sheet
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  • Name and use alternative cost-flow assumptions
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  • Define prepaid expenses and understand how they are reported on the       balance sheet
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  • Determine how the cost of land, buildings, & equipment is reported       on the balance sheet
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  • Define the terms capitalize and expense with respect to property,      plant, and equipment
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  • Use alternative methods to calculate depreciation
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  • Understand how deprecation for income tax purposes differs from financial       accounting depreciation
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Introduction

This course deals with two facets of accounting: Financial Accounting     and Managerial Accounting. Lessons 1, 2, and 3 focus on Financial Accounting.    Lessons 4, 5, and 6 focus on Managerial Accounting.

Accounting is the process of identifying, measuring, and communicating     economic information about an entity for the purpose of making decisions     and informed judgments (Chapter 1). Financial accounting standards are     not a “fixed code of rules,” but are established in response     to user needs and business developments. Accountants need to apply professional     judgment in the application of accounting principles. Ethical practices     are imperative in the role of the accounting profession.

Chapter 2 is a key chapter of the text. The material presented in it     becomes a foundation for all subsequent financial accounting topics. A     significant amount of time should be spent studying the purpose and content     of the following account categories: asset, liability, owners’ equity,    revenue, and expense associated with each financial statement and how     they all tie together.

The components on the left side of the accounting equation (assets) are     examined in Lesson 1. Assets are things of value to a firm. Chapter 5     details the current asset portion of the accounting equation and introduces     inventory cost-flow assumptions. Chapter 6 details non-current assets.    Lesson 2 covers the right side of the accounting equation (liabilities     and owner’s equity) in detail.

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