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INVENTORY

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INVENTORY Powered By Docstoc
					      BASIC ACCOUNTING
          CONCEPTS
• Who or what is the financial report about?
• Entity the business separated from the
  personal lives of owners, managers, and
  employees.

           MANAGERS
  ENTITY                        [AUDITOR]
              OWNERS
Conflicts of Interest, Ethics
     Who needs to know?
•   Owners
•   Managers
•   Employees
•   Creditors
•   Suppliers
•   Customers
•   Government [?]
 What is the purpose of the
     financial report?
Demonstrate stewardship
 Earning income with and taking care of the
 estate of others
Demonstrate Condition
 Liquidity--pay the bills
 Solvency--sufficient owners' equity
 Earnings--sufficient income
         Related Issues
Responsibility
– The report is the report of management,
  not the accountants, the auditors, or the
  government
Disclosure
– Management's responsibility to disclose
  everything ". . .such as to not make the
  statements misleading.", complete without
  limitations.
   NOT. . .I met X and he was sober this time.
            Principles

Objectivity: Not subject to bias.
Conservatism: Record Losses, defer
 gains
Going Concern: Company continues
 indefinitely
Consistency: Use same methods from
 year to year.
Materiality: Only and all important
 disclosures are made
   Accounting Identity: A=L+OE
Everything we have came from somewhere.
Where did our investment come from?
  Investment = Sources
  Assets = Borrowings + Owners Invested + Earned
  Assets = Liabilities + Stock sold + Earnings [Ret.]
          Earnings = Revenues – Expenses
  Debits = Credits

				
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posted:8/19/2012
language:English
pages:6