Main Points Summary- Gee Wiz
The 5 most important points/topics from Chapter 1-3 are the following:
1.) Types of Business Organizations
2.) Users of Accounting Information
4.) The Accounting Cycle [includes source documents, statements, and other Review from Grade 11 Accounting)
5.) Correcting Errors
Types of Business Organizations
Chapter 1-3 deals with three different types of business organizations and also non-business organizations. The three types are sole proprietorship, partnership, and corporation. Non-business organizations are not-for profit and some can be classified as government organizations. Each type of business organization has distinct characteristics/legal issues attributed to it (taxes, unlimited vs limited liability, etc)
Users of Accounting Information
There are two distinct kinds of users of information- external and internal information users. External information users are not directly involved in running the organization and mostly use financial accounting for their information needs. Internal information users are directly involved in managed and operating the organization and mostly use managerial accounting for their information needs.
GAAPS- General Accepted Accounting Principals
GAAPS are basic assumptions and guidelines that are used when preparing financial statements. The GAAPS we learned in this chapter are: business entity concept, continuing concern concept, principle of conservatism, objectivity principle, revenue recognition convention, matching principle, time period concept, cost principle, consistency principle, materiality principle, and full disclosure principle)
The accounting cycle is the process by which accounting statements/ is prepared. The steps followed on the accounting cycle are: 1.) Analyze Transactions 2.)Journalize 3.)Post 4.) Prepare unadjusted trial balance 4.) Adjust 5.) Prepare post-adjusted trial balance 6.) Prepare statements 7.) Close 8.) Prepare post-closing trial balance 9.) Repeat J
Source documents, general journals, ledgers (including chart of accounts), income statement, balance sheet, and trial balances are all part of the Accounting Cycle.
If an error occurs in the trial balance, there are several ways that the error can be found. The steps taken toward identifying an error include checking to see if calculations were completed correctly, checking for transposition errors, checking if debit and credit were correctly listed, and checking errors according to ledger and original journal accounts.
How Does The Unit Relate to GAAPs?
In this unit, we are review the basic GAAPs that we learn in Grade 11 Accounting. The GAAPs that we review are listed above in one of the 5 Key Points.
How does the unit relate to identifying, recording, measuring, and communication information?
In Chapters 1-3, we review how to do the first basic steps of the Accounting Cycle. We identify by examining source documents; record and measure by using the general ledger and journals; and finally communicate information by posting trial balances.
How do the topics covered ensure that accounting information is relevant, reliable, consistent, and comparable?
In Chapters 1-3, we review the GAAPS, whose primary purpose is to make information in financial statements relevant, reliable, consistent, and comparable.