Accounting intro by notes

• We study acounting to know the language of buisness, provide accurate infos and to makes economics decisions
• The fundamental purpose is to provide accurate info about buisness to make decisions like buying the place, work with,... through financial estatment
• Bookkeeping is the inital phase of accounting. He collect info and store it. He also record buisness transaction.
• Accounting is the second phase , he prepare business statment
• Forms of Business organizations

  ·        Proprietorship

  ·        Partnership

  ·        Corporation

  ·        Limited Liability Company
• Current Liabilities:

  Obligations expected to be satisfied through current assets or creation of other current liabilities within one year

  Accounts Payable

  Sales tax Payable

  Income Tax payable

  Accrued payables

  Advance Deposit

  Current Maturities of Long-Term Debt
• Balance sheet

  • Assets
  • liabilities
  • equity
• Income statment

  • Revenue
  • expenses
• GAAP

  1. Objective prnciple
  2. Cost principle
  3. Going - concern principle
  4. Monetary unit principle
  5. Buisness entity principle
  6. revenue recognisition principle
  7. matching principle
  8. ( accural vs cash accounting)
  9. buisness transaction
  10. Double entry account
  11. accounting income vs taxable income
  12. the accounting equation
• Profit / loss statment

  profit = revenue - expenses
• objective principle

  all statment must be supported by evidence
• cost principle 


  accounting info must be based on the actual cost
• Going concern principle

  asssume that the buisiness will continue indefinitly
• monetary unit principle 


  express transaction in 1 unit
• buisness entity principle 


  a buisness is accounted for separatly from other buisness entities including it's owner.
• revenue recognition principle

  recognise revenue when it's earned
• Matching principle

  sales should match with expenses
• buisness transaction 


  is an exchange of proprety , goods or services for cash or a promise to pay
• double entry account 


  every buisness transaction involve at least 2 accounts
• acc income vs taxable income ( usa)

  difference amoungs deprectation methods used for financial reporting and tax reporting
• There are two basic types of credit cards:

  ·        Non-Bank credit card: Travel and entertainment cards such as American Express or Diners Club. They have no predetermined spending limits and must be paid in full each month.

  ·        Bank cards such as MasterCard, Visa, Discover, Optima, GM and Ford cards which are sponsored by individual banks. The bank defines spending limit (sometimes called credit lines) and each offers different terms and conditions.
• Benefits of Credit Cards

  • You can shop or travel without having to carry large sums of cash. Credit cards are accepted all over the world and generally give the best currency exchange rates.
  • You have immediate use of goods and services, especially important for expensive items like appliances or furniture.
  • Credit cards can be used to deal with unexpected financial emergencies.
• A sole proprietorship is an unincorporated business owned by one person. Proprietorships are the most common form of business organization because they are so easy to start.
• A partnership is an unincorporated buisness owned by two of more partners. A partner may be either an individual or a corporation.
• A corporation is a legal entity, having an existence separate and distinct from that of its owners.
• Capital Stock: General term used to describe the shares of ownership in a corporation.
• Proprietorship

  –       The business does not pay income taxes

  –       The owner pays the tax with her or his personal income

  –       Form 1040 – U.S individual tax return

  –       Self Employment tax: social security and Medicare tax.
• Partnership:

  –       The business does not pay income taxes

  –       Each partner pays the tax with her or his personal income

  –       Form 1065 – U.S Return on partnership

  –       Self Employment tax: social security and Medicare tax.
• Corporation:

  –       The corporation is separate from owners

  –       The business pays income taxes

  –       C corporations: (IRC)

  –       S Corporations treated as partnerships for tax purposes: stockholders will pay the taxes
• Balance sheet

  Snap shot in time

  assets, liabilities, owner's equity

  retained earnings

  historical value

  assets= liabilities+owner's equity
• assets

  They are economic resources that are owned by buisness an are expected to be benefit for future operations
• Liabilities are debts they represents negative future cash flows for the enterprise.
• Currents liabilities: Obligations expected to be satisfied through current assets or creation of other current liabilities within one year or the operating cycle, whichever is longer.
• Long-term Liabilities: Obligations that will not be satisfied within one year or operating cycle, whichever is longer.
• Account receivable: Amount owed to a firm by its customers
• Inventories

  •  Stock of food and beverage merchandise held for resale
  • Guest supplies, Office supplies, cleaning supplies,…..held for future use
  •     Food inventory, beverage Inventory, gift shop inventory

  Supplies of china, glassware, and Silver: Property and Equipment
• Prepaid Expenses

  Payment of cash, that is recorded as an asset because  service or benefit will be received in the future.
• Noncurrents Assest :Not expected to be converted to cash or consumed within one year or the operating cycle, whichever is longer
• Depreciation is a cost allocation process that systematically and rationally matches acquisition costs of operational assets with periods benefited by their use.
• Trademarks

  A symbol, design, or logo associated with a business.

  Internally developed trademarks have no recorded asset cost.

  Purchased trademarks are recorded at cost.