【正文】 Corporations – Are owned by stockholders or shareholders – Are business entities and legal entities – Are liable for all debts ? Stockholders have no personal obligation for corporation debts ACCOUNTING PRINCIPLES AND CONCEPTS ? Generally accepted accounting principles (GAAP) are – The rules that govern how accountants operate – Based upon a conceptual framework written by the Financial Accounting Standards Board (FASB) ACCOUNTING PRINCIPLES AND CONCEPTS ? The FASB works with the SEC (Securities and Exchange Commission) and the AICPA (American Institute of Certified Public Accountants) KEY ACCOUNTING ORGANIZATIONS Private Sector The FASB determines generally accepted accounting principles Public Sector Law creates the SEC to regulate the stock and bond market in the . GAAP governs accounting information Private Sector Accountants apply GAAP through the AICPA ACCOUNTING PRINCIPLES AND CONCEPTS ? The entity concept –States that an organization is an economic entity that keeps its affairs separate from those of the owner(s) ? The reliability (objective) principle – States that accounting records and statements are based on the most reliable data available and documented by objective evidence ACCOUNTING PRINCIPLES AND CONCEPTS ? The cost principle – States that acquired assets and services should be recorded at their actual (historical) cost and should maintain that historical cost for as long as they are owned ? The goingconcern concept – States that the entity will remain in operation for the foreseeable future ACCOUNTING PRINCIPLES AND CONCEPTS ? The stablemoaryunit concept – States that each dollar has the same purchasing power as any other dollar at any other time THE ACCOUNTING EQUATION ? The accounting equation presents the resources of the business and the claims to those resources Economic Resources = Claims to Economic Resources Assets = Liabilities + Owners’ Equity or ? Assets are the economic resources of a business that are expected to be of benefit in the future ? Claims to assets e from – Liabilities ? Economic obligations debts payable to outsiders, called creditors –Owners’ equity (capital) ? Assets held by the owners of the business THE ACCOUNTING EQUATION ? For a corporation, stockholders’ (owners’) equity consists of two main categories – Paidin capital – Retained earnings THE ACCOUNTING EQUATION Assets = Liabilities + Stockholders’ Equity Assets = Liabilities + Paidin Capital + Retained Earnings or ? Paidin (contributed) capital is – The amount invested in the corporation by its owners – Comprised basically of mon stock THE ACCOUNTING EQUATION ? Retained earnings – Is the amount earned by ineproducing activities and kept for use in the business – Is affected by ? Revenues increase