Chapter 2 - Financial statements and accounting concepts/principles. After studying this chapter you should understand: What are generally accepted accounting principle? What kind of information is reported on each financial statement and how are the financial statements related? What are transactions? What is the meaning and usefulness of the accounting equation? What are meanings of the captions in the financial statements?. | © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Accounting: What The Numbers Mean Tenth Edition Marshall, McManus, and Viele Chapter 2 Financial Statements and Accounting Concepts/Principles PowerPoint Authors: Susan Coomer Galbreath, ., CPA Charles W. Caldwell, ., CMA Jon A. Booker, ., CPA, CIA Cynthia J. Rooney, ., CPA Chapter 2: Financial Statements and Accounting Concepts/Principles An entity’s financial statements are the end product of a process that starts with transactions between the entity and other organizations and individuals. Transactions Procedures for sorting, classifying, and presenting (bookkeeping) Selection of alternative methods of reflecting the effects of certain transactions (accounting) Financial Statements LO 1 Financial Statements 2- Recording transactions, the economic interchanges between an entity and other organizations and/or individuals, requires both bookkeeping and accounting functions. The flow begins with the bookkeeping function, procedures for sorting, classifying, and presenting the transactions, and continues with an accounting function of selecting among alternative methods of reflecting the effects of those transactions. The entity's financial statements are the end product of these processes. Account balances are then used in the preparation of financial statements. Cash Accounts Receivable Accounts Payable Transactions are summarized in accounts. Accounts are used to organize like-kind transactions. LO 1 Accounts 2- Transactions are summarized in accounts. Accounts are used to organize like-kind transactions, just like file folders are used to organize information stored in a file cabinet. Account balances are then used in the preparation of financial statements. In addition to the financial statements, the annual report will probably include several accompanying notes or explanations of the accounting policies used and detailed information about many of the amounts and captions . | © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Accounting: What The Numbers Mean Tenth Edition Marshall, McManus, and Viele Chapter 2 Financial Statements and Accounting Concepts/Principles PowerPoint Authors: Susan Coomer Galbreath, ., CPA Charles W. Caldwell, ., CMA Jon A. Booker, ., CPA, CIA Cynthia J. Rooney, ., CPA Chapter 2: Financial Statements and Accounting Concepts/Principles An entity’s financial statements are the end product of a process that starts with transactions between the entity and other organizations and individuals. Transactions Procedures for sorting, classifying, and presenting (bookkeeping) Selection of alternative methods of reflecting the effects of certain transactions (accounting) Financial Statements LO 1 Financial Statements 2- Recording transactions, the economic interchanges between an entity and other organizations and/or individuals, requires both bookkeeping and accounting functions. The flow begins with the .
