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ACCT 2101 EXAM 1

Date of Final Exam: 1:30 class: Thursday, 4/30, at 2:50 p.m.


Private Company: Public cannot see what private companies are putting on the
financial statements. The companys shares/stocks are not traded in the public.
Public Company: There is evidence of ownership (shares) that is traded in the
public domain
SEC: Securities and Exchange Commission. SEC is a regulatory agency
10-K: an annual report filed with the SEC by publicly traded companies
Solvency: ability to pay debts as they become due
Profitability: ability to generate income
Accounts Receivable: Amount customers owe the company
Liabilities (example: accounts payable): Amounts the company owe others
Periodicity: the subdividing of an entitys life into time periods for reporting
economic activities
Regulatory Agency: regulates all public companies in the US

Generally Accepted Account Principles (GAAP): financial statements are


currently prepared according to GAAP that have been adopted in order to achieve a
presentation of financial information that is understandable by users as well as
relevant and reliable for decision making.

Two authorities primarily responsible for establishing GAAP in the US are SEC
and FASB (Financial Accounting Standards Board)

Financial Accounting Standards Board (FASB): Private-sector organization

FASB Accounting Standards Codification became the source of authoritative


GAAP
FASBs three primary goals in developing the Codification:
o 1) simplify user access by codifying in one source all authoritative
GAAP in US
o 2) to ensure that the codified content accurately represented
authoritative US GAAP as of July 1, 2009
o 3) to create a codification research system that is up to date for the
released results of standard activity
SEC and FASB have worked closely together in the development of
accounting policy (SEC is more supportive role)

Statements of Financial Accouting Standards (SFASs): Issued by FASB

Financial Statements: A corporate annual report contains four basic financial


statements
1. Balance sheet: shows the financial position assets, liabilities, and
stockholders equity of the firm on a particular date, such as the end of a
quarter or year
2. Income Statement presents the results of operations revenues,
expenses, net profit or loss, and net profit or loss per share for the
accounting period
3. Statement of Comprehensive Income
4. Statement of Stockholders Equity reconciles the beginning and
ending balances of all accounts that appear in stockholders equity section
of the balance sheet.
5. Statement of Cash Flows provides information about the cash inflows
and outflows from operating, financing, and investing activities during an
accounting period

Balance Sheets= Statement of Financial Position


Cash= savings acct, checking acct
Income Statement= Statement of Earnings, Statement of Operations, Statement
of Profit + Loss
Revenue= Net Revenue, Sales, Net Sales
Revenue: sales price the company charge for the services they
perform
Net Income= Net Earning, Net Profit

Statement of Stockholders Equity= Statement of Retained Earnings

Notes to Financial Statements: Explains everything in the financial statement.


This section provides additional information, and explains items on the financial
statement.
MD&A: Managements Discussion and Analysis
Forward-Looking Information Mean: Forward-looking information is the
prediction of things that will happen in the future
Safe Harbor Clause: The interpretation of what may happen in the future but
doesnt necessarily have to happen. Can be found in the MD&A. Required statement
in 10-K

Litigation: Lawsuits against the company


Auditors Report: Report to see if the financial statements comply with the GAAP

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