Financial accounting 2/2

Attendance and Name Usage

The instructor started by taking attendance, mentioning students by name (Nicole, Lewis, Alberto, Judith, Katie, Justin, Emily), and suggesting the use of name cards to help familiarize everyone with names. The instructor reminded the class of the importance of using their Farmingdale email addresses for course communications, as emails sent to Brightspace may not be promptly received.

Email Protocol

The instructor emphasized that using the Farmingdale email is essential for timely communication. Students are advised to check Brightspace for grades and other information, as it transfers grades automatically. For assignments in Connect, accessing them through Brightspace ensures proper tracking and grading.

Homework Submissions

There was feedback from students regarding issues finding the text box for Homework 1.1. The instructor clarified that all assignments should be completed within Connect, accessible through Brightspace, eliminating the need for students to individually confirm submission. The instructor noted some students combined multiple homework answers into a single post and stressed that each assignment must be submitted separately. There is a provision to submit for half credit within one week for any missed submissions, except those requiring document uploads. Late submissions for these types must be completed by 9 AM the following day, as solutions will be released at that time.

Internship Opportunities

An announcement was made regarding an upcoming schedule for business forums prepared by Lisa Librano, the internship coordinator at Farmingdale. The instructor strongly encourages students to seek internships for practical experience, stating that Lisa provides significant support in resume writing and preparation even for those without 60 credits. Students should take advantage of these resources and industry connections. Networking with speakers after presentations is recommended, including connecting on LinkedIn.

Course Structure and Assignments

In the first class, students received a Connect assignment to establish their link to the course, along with three Brightspace text responses. For the upcoming homework, students can expect assignments from Connect and Brightspace, including a SmartBook assignment intended to guide reading and comprehension of dense accounting material.

Exam Information

Students have the option of taking exams either through Connect or on paper. However, they must download the required proctoring software for online exams. Instructions provided necessitate the use of personal email to set up the browser extension due to limitations with Farmingdale email. Troubleshooting helplines were provided for those encountering difficulties.

Building Accounting Knowledge

The instructor discussed the importance of learning vocabulary and syntax (grammar rules) in the context of accounting, akin to learning a new language. The initial weeks will focus on memorization and understanding of the foundational terms and concepts needed for the course.

Types of Business Entities

The lecture transitioned to a discussion about types of business organizations, starting with sole proprietorships, partnerships, and corporations. Definitions and implications of each structure were explained:

  1. Sole Proprietorship

    • Defined as the simplest form of business with one owner referred to as a proprietor.

    • Personal liability of the owner is limited, which means personal assets are at risk in case of lawsuits against the business.

    • Owners cannot pay themselves a salary; withdrawals are treated as draws against equity. These draws do not count as expenses and, therefore, do not reduce taxable income.

    • Tax reporting is done via Schedule C on personal returns, where net income (profit) gets taxed at personal income levels.

  2. Partnerships

    • Involves two or more partners with shared responsibility and unlimited personal liability.

    • Partners can be general (with unlimited liability) or limited (who risk only their investment).

    • The profit is shared based on an agreement, and partners receive K-1 forms for tax reporting purposes.

  3. Corporations

    • Defined as a separate legal entity owned by shareholders.

    • Owners enjoy limited liability, meaning personal assets are safe from business debts.

    • Corporations pay corporate income tax, and if dividends are paid, the shareholders report this income separately with 1099 forms.

The importance of maintaining clear records and good practices to avoid legal complications was emphasized, such as the concept of piercing the corporate veil where courts may hold owners liable if personal and business finances are commingled.

Accounting Principles and Financial Statements

The course will explore the four primary financial statements:

  1. Income Statement - shows revenue and expenses over a period, resulting in net income.

  2. Statement of Stockholders' Equity - details changes in equity over a period.

  3. Balance Sheet - represents a snapshot of the company's assets, liabilities, and equity at a specific point in time.

  4. Statement of Cash Flows - provides insights on cash inflows and outflows.

  5. Notes to Financial Statements - necessary disclosures accompanying the financial statements for clarity on accounting methods and assumptions.

The concept of GAAP (Generally Accepted Accounting Principles) was introduced, along with the existence of alternative frameworks like IFRS (International Financial Reporting Standards).

Accounting Cycle and Categories

The accounting system is likened to a filing cabinet with different drawers representing various categories:

  • Assets

  • Liabilities

  • Equity

  • Revenue

  • Expenses
    Each category will have its own accounts, with an emphasis on memorizing account names and their respective categories as critical for future assignments.

Homework

Students were reminded of the different types of assignments due weekly, which typically include text responses and homework in Connect or Brightspace. Specific instructions were given on tasks, including selecting a business pitch to analyze for the next class. The emphasis was on unique selections and the importance of timestamps for connections on homework submissions. Deadlines for submissions are firmly set for Sunday nights at 9 PM.