Week One Student Guide

Accounting is a valuable service function designed to provide accurate and timely information to internal and external stakeholders. Those stakeholders rely on four primary financial statements: the income statement, the capital statement, the balance sheet, and the statement of cash flows. Naturally, you begin by studying those four financial statements and the accounting processes that lead to their creation. Those processes include recording financial transactions in journals and then posting to the general ledger.

In this first week, you learn the purpose of those four statements, what the financial statements include, and how the financial statements are constructed to provide valuable information to stakeholders. You also learn the basic mechanics of accounting. These include journalizing transactions into accounting records using debit and credit rules. You also learn why the general ledger is critical to the accounting process and how transactions are posted to the general ledger.

Basic Accounting Principles and Concepts

OBJECTIVE: Identify the four basic financial statements.

Resources: Ch. 1 & 2 of Financial Accounting Content

• Ch. 1: “Introduction to Financial Statements”

o Forms of Business Organization

• Internal Users
• External Users
• Ethics in Financial Reporting

o Business Activities

• Financing Activities
• Investing Activities
• Operating Activities

o Communicating with Users

• Income Statement
• Retained Earnings Statement
• Balance Sheet
• Statement of Cash Flows
• Interrelationship of Statements
• Other Elements of an Annual Report

• Ch. 2: “A Further Look at Financial Statements”

o The Classified Balance Sheet

• Current Assets
• Long-Term Investments
• Property, Plant, and Equipment
• Intangible Assets
• Current Liabilities
• Long-Term Liabilities
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