Accounting can be considered the language of business. If you are learning accounting for the first time, embracing its foundational concepts may be a challenging process. Mastery of accounting primarily rests in your ability to critically think through and synthesize the information as it applies to a given situation. You should approach the learning of accounting the same way you would approach learning a foreign language; It will take time and practice to ensure you remember the concepts. There are a number of sub-disciplines that fall under the umbrella of "accounting,” but in this course, we will be focused on financial accounting. Accounting as a business discipline can be viewed as a system of compiled data. The word data should not be confused with "information.” In terms of accounting, "data” should be viewed as the raw transactions or business activity that happens within any business entity. For example: Someone uses $30,000 of their savings to start a business. The use of these funds within the start of this new business is in fact data. Now that you have this data, what are you going to do with it? The answer to this question can be summed up in one word - accounting! Taking this data and transforming it into useful information is what happens when accounting is implemented within a business. The word information should be viewed as the communicated results of the data as it has happened in the business within a specified period of time. This information is used by decision makers to support how they determine specific courses of action within the business. This course introduces you to financial accounting in preparation for more advanced business topics within the business major. Recording financial information in a standard format allows managers, investors, lenders, stakeholders, and regulators to make appropriate decisions regarding their respective interests. In this course, the formats of focus will be identified as the Income Statement, the Balance Sheet, Statement of Cash Flows, and Statement of Shareholders' Equity. In this course, you will learn how to compile and analyze these financial statements, determine the value of a firm, and compare the firm to its competitors.
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In this introductory unit of the course, you will learn about a variety of the foundational elements of accounting that are crucial to the understanding of the material in this course.
To understand financial accounting, you will need an in-depth understanding of the four basic financial statements and the purpose they each serve. You will also need to understand how data is captured and transformed into information and how the accounting equation seeks to ensure that you are properly recording the data.
Throughout the course you will be introduced to various career fields and employment positions associated with the concepts of this course. Consider this information an exploration of the viability of accounting as an employment option and as a means of reinforcing how significant these concepts are to the success of business operations.Page: 1
This unit of the course correlates with Chapter 3 of the primary text. There is a specific way that data is recorded, so a foundational understanding of this process is necessary. Understanding the meaning and use of concepts like journal, journal entries, ledger, trial balance, debits and credits, and vertical/horizontal analysis is an intricate part of your financial accounting study.Page: 1
By now, you should have a foundational understanding of accounting and its guiding principles and concepts. You will now need to learn how to synthesize this information, which often requires an adjusting journal entry. Before you can learn about adjusting entries, you will need to be able to distinguish between cash- and accrual-based accounting. There is some distinction between the two methods, and while some smaller business may be able to effectively use a cash basis of accounting, most organizations use an accrual basis of accounting. Subsequently, the accrual basis is the foundation on which you are learning the concepts presented in this course.Page: 1
Up until this point in the course, you have been learning how to take the transactions that happen within a business entity and process this raw data into useable information. As mentioned earlier in the course, this useable information comes in the form of the financial statements. This section of the course will explain how to review and summarize the accounting cycle, as well as prepare the income statement, the statement of retained earnings, and the balance sheet. Additionally, you will be provided with insight on how to use an accounting worksheet to organize your work, prepare adjusting entries, and complete a post- closing trial balance.Page: 1Quiz: 1
In this unit, you will learn about financial reporting and examine the financial statements of a public company. Public companies are required to file their financial statements with the SEC on a quarterly and annual basis. Fortunately for us, the SEC has a standard format for presenting financial information. This assists us in reading and interpreting financial information.Page: 1
In order for many businesses to conduct daily activity, they will have to buy merchandise for their end users. There are a number of ways to account for the purchasing and integration of this merchandise within a business, and the decision on how a business entity will account for this from an accounting perspective rests on a number of factors. In this section of the course, you will be introduced to the inventory valuation concepts of FIFO - First in First Out and LIFO - Last in First Out, as well as the concept of weighted-average. Choosing an inventory valuation method is a major decision a merchandising business entity will have to make even before the merchandise is purchased; it is also a decision that dictates the valuation of the merchandise on hand within the business entity.Page: 1
During the course of regular business, it is not uncommon to provide credit to some customers. Once a business provides an extension of credit, it now owns a promise that it will be paid back. As part of this agreement, the business entity will charge interest at varying rates, which are typically imposed based on the credit worthiness of the customer. It is also not uncommon that the business will not be able to collect some of these credit extensions. In accounting, we identify these promises someone makes to a business entity as an accounts receivable. This section of the course will provide analysis and insight on accounts receivables and highlight specific information on what to do when a business extends credit to its customers.
Also, during the regular course of business, there may come times where the business entity needs to make specific purchases to support the regular business activity, but they do not have enough cash on hand to meet these demands from a current asset perspective. In these types of situations, it is viable for a business entity to possess lines of credit. In this type of situation, the business entity has created a promise to pay someone else as a result of being extended a particular line of credit or goods on credit. These types of transactions would be considered payables and would in fact create liabilities for the organization. Please remember that earlier in the course, you were introduced to the fact that a liability can also be considered a promise to pay.Page: 1
Property, plant, and equipment require the largest amount of investment for a company. This unit introduces you to the life cycle of tangible long-term assets: acquisition, depreciation, and disposal.
This unit also includes other long-term assets such as natural resources and intangible assets. Companies such as mines and lumber companies account for the resources that are extracted from the environment. The most common intangible asset is goodwill, which is recorded when acquiring a company.Page: 1
This unit addresses the two ways in which a company can raise funds: debt and equity. In order to finance long-term assets, companies issue long-term debt in the form of bonds. Equity is most often issued when companies begin operations to raise start-up capital. In BUS202: Principles of Finance, you will learn more about the balance between debt and equity in a company.Page: 1
Remember that the balance sheet and income statement are prepared using the accrual basis of accounting. The statement of cash flows is prepared using information from the accrual basis statements to tell what cash was received for and how cash was spent. The statement of cash flows classifies business transactions in to operating activities, investing activities, and financing activities.Page: 1
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