Introductory Financial Accounting

What you'll learn

• Explain the purpose of accounting, its internal and external users, the difference between financial and managerial accounting, and the roles of FASB, US GAAP, the SEC, the AICPA and state boards of accountancy.
• Apply the accounting equation and the expanded equation to analyze business transactions, and classify items as assets, liabilities, equity, revenues, expenses or dividends.
• Record transactions with debits and credits in a general journal, post them to ledger accounts, and design a simple chart of accounts.
• Prepare a trial balance, explain what it does and does not prove, locate common errors and record correcting entries that preserve the audit trail.
• Distinguish accrual from cash accounting and record adjusting entries for prepaid expenses, supplies and unearned revenues.
• Record adjusting entries for accrued revenues, accrued expenses and straight-line and declining-balance depreciation, and prepare an adjusted trial balance.
• Prepare an income statement, a statement of changes in equity and a classified balance sheet, record closing entries and prepare a post-closing trial balance.
• Record merchandising transactions under perpetual and periodic systems, including returns, discounts, freight and state sales tax, and prepare a multiple-step income statement.
• Apply specific identification, FIFO, weighted-average and LIFO costing, apply the lower of cost and net realizable value rule, analyze inventory errors and estimate inventory, and explain the LIFO conformity rule.
• Describe internal control and the fraud triangle, apply controls to cash, prepare a bank reconciliation with the required entries, and account for a petty cash fund.
• Account for accounts and notes receivable, estimate expected credit losses with percentage-of-sales and aging methods, record write-offs and recoveries, and compute receivables turnover and days sales outstanding.
• Prepare a statement of cash flows by the indirect method, compute and interpret liquidity, activity, profitability and solvency ratios, and complete a full accounting cycle for a small business.