Financial Accounting Fundamentals
Financial Accounting Fundamentals

Financial Accounting Fundamentals

Lead Author(s): Lisa Briggs

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The accounting function is about representing business activities in monetary terms and providing that information to people who need it.

Financial Accounting Fundamentals

Contents

Chapters and Objectives

Chapter 1 Introduction to Accounting

Explain the importance of accounting information and who the users of accounting information are; explain the accounting process; discuss advantages and efficiencies of computerized accounting software; discuss the forms of business organizations

Chapter 2 Essential Accounting Elements

Define and identify the following classifications: asset, liability, owner’s equity, revenue and expense accounts; give examples of transactions involving changes in the five classifications of accounts; explain the fundamental accounting equation; record business transactions using a columnar format

Chapter 3 Using T-Accounts, Debits and Credits, and Preparing the Unadjusted Trial Balance

Present the fundamental accounting equation using T account form and label debit and credit sides and normal balance sides; record business transactions in T account form; determine the balances of T accounts; prepare an unadjusted trial balance; discuss how to troubleshoot errors in the trial balance

Chapter 4 Summarizing Accounting Information

Prepare financial statements from the unadjusted trial balance

Chapter 5 The General Journal, Special Journals, and the General Ledger

Record business transactions in the general journal and four special journals; post entries from the journals to the general ledger and the subsidiary ledgers; explain how a chart of accounts is organized

Chapter 6 Adjusting Entries and the Work Sheet

Prepare a work sheet for a business that include the following types of adjustments: supplies used, expired insurance, uncollectible accounts, depreciation, merchandise inventory, and accrued wages

Chapter 7 Completing the Accounting Cycle

Explain the need for closing entries; journalize closing entries; prepare a post-closing trial balance; discuss the use of reversing entries; discuss how computerized accounting software handles closing entries

Chapter 8 Internal Controls

Discuss the need for systems and policies for internal controls to protect assets; discuss internal controls for cash receipts, cash payments, and the purchase and receipt of inventory; discuss the limitations of control measures; reconcile a bank statement and record the necessary journal entries

Chapter 9 Payroll

Discuss the difference between an employee and an independent contractor; understand the role of income tax laws that affect payroll deductions and contributions; calculate total earnings; discuss required and voluntary payroll deductions; prepare a payroll register and discuss how to calculate required tax deductions from gross pay (federal income tax withheld, social security, Medicare) to determine net pay; create journal entries to record and pay the payroll and record the employer’s payroll tax expenses

Chapter 10 Accounting for Partnerships and Corporations

Discuss the accounting for partnerships and corporations; prepare a statement of partners’ equity; prepare journal entries for stock transactions; prepare a classified balance sheet for a corporation

Chapter 11 Statement of Cash Flows

Identify cash flows arising from operating, investing, and business activities and how these changes affect a company’s cash situation; prepare a statement of cash flows using the indirect and the direct methods; interpreting cash flows from operating, investing, and financing activities

Chapter 12 Financial Statement Analysis

Prepare horizontal and vertical analyses; calculate liquidity, solvency, and profitability ratios; interpret the information from horizontal, vertical, and ratio analyses