Goodwill

1. What are some of the key differences between assets and liabilities? Which of the three financial statements features these categories prominently?

Assets are things of value owned by the organization such as buildings, equipment, patents, copyrights, cash, inventory, etc. Liabilities are what a company owes, such as accounts payable, notes payable, lines of credit, etc. A balance sheet lists assets and liabilities.

2. Identify the six steps in the accounting cycle.

There are six steps in the accounting cycle. Bookkeeping is when all transaction documents such as cell slips, expenses and travel records are analyzed. Every transaction is recorded into daily journals and they are then transferred into a ledger. A trial balance checks all the figures in the ledgers to make sure they’re balanced. Once the trial balance is prepared then preliminary financial statements can also be prepared. Preliminary financial statements are reviewed to ensure that the results are actually in line with expectations. Once financial statements have been finalized, ratio analysis is done. Ratio analysis on liquidity, leverage, profitability, and activity is conducted to further determine the organization's financial health.

3. Identify the different types of accounting. Which approaches are used by Goodwill?

There are five major types of accounting: managerial, financial, tax, governmental and not-for profit accounting, and auditing.

Managerial accounting produces information primarily for internal use by the company’s management. Financial Accounting produces information for external use in the form of financial statements. Tax accounting refers to accounting for the tax related matters. Government and not-for-profit accounting produces information for use in the public sector. Auditors check the work of the company’s accountants and often provide a check of the company’s internal accounting procedures. Goodwill accounting falls into the Government and not for profit accounting.