CHAPTER 1: An Introduction to Accounting
Definition of accounting and identify users
of accounting information.
Role of Financial Accounting Standards Board (FASB) in establishing generally
accepted accounting principles (GAAP).
Accounting theories underlying GAAP: cost principle,
objectivity principle, monetary unit assumption, and economic unit assumption.
Identify components of the accounting equation:
assets = liabilities + owners' equity.
of transactions on the accounting equation
and financial statements using the +/- format.
Prepare four basic financial statements and understand what each statement discloses: income
statement, statement of retained earnings, balance sheet, and statement
of cash flows.
Classify cash flow transactions into the following categories: operating
activities, financing activities, and investing activities.
Understand why the historical cost principle and matching concept are used under current US accounting standards and how the adoption of international standards will change the historical cost principle.
Know the components of an annual report.
2: Accountinh for Accruals and Deferrals
Cash basis versus accrual basis accounting.
why some accounts need to be adjusted prior to preparing financial statements under the matching concept.
Distinguish between accounting for accruals and accounting for deferrals.
Record adjusting entries for accruals using the +/- format: interest
Record adjusting entries for deferrals using the +/- format: prepaid
expenses (such as insurance), supplies, and unearned revenues
(such as subscriptions).
Double-Entry Accounting System
Rules of debit
and credit and identify normal balance of accounts.
Purpose of closing entries
and a trial balance.
At this time, you do not need to record transactions in general journal format, post to t-accounts,
nor prepare a trial balance.
Calculation and interpretation of return on assets ratio, debt to asssets ratio and return on equity ratios.