Professional Documents
Culture Documents
SPPTChap 001
SPPTChap 001
Accounting in Business
Chapter 1
PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA
Charles W. Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA
Cynthia J. Rooney, Ph.D., CPA
1-2
C1
Accounting in Business
1-3
C1
Importance of Accounting
Keep a chronological
log of transactions.
1-4
C1
1-5
Opportunities in Accounting
1-6
C3
1-7
C4
Generally Accepted
Accounting Principles (GAAP)
Financial accounting is governed by concepts and rules known
as generally accepted accounting principles (GAAP). GAAP aims
to make information relevant, reliable, and comparable.
Reliable information is
trusted by users.
Relevant information
affects decisions
of users.
Comparable information
is helpful in contrasting
organizations.
1-8
C3
Fraud Triangle
Three factors must exist for a person to commit fraud:
opportunity, pressure, and rationalization.
1-9
C4
International Standards
In todays global economy, there is increased demand by external
users for comparability in accounting reports. This demand often
arises when companies wish to raise money from lenders and
investors in different countries.
International Accounting
Standards Board (IASB)
International Financial
Reporting Standards (IFRS)
An independent group
(consisting of individuals
from many countries), issues
International Financial
Reporting Standards (IFRS)
1 - 10
C4
1 - 11
C4
1 - 12
C4
Accounting Principles
Cost Principle
Matching Principle
1 - 13
C4
Accounting Assumptions
Now
Future
Going-Concern Assumption
Reflects assumption that the business
will continue operating instead of
being closed or sold.
1 - 14
C4
1 - 15
C4
SarbanesOxley (SOX)
Congress passed the SarbanesOxley Act to help curb financial abuses at
companies that issue their stock to the public. SOX requires that these public
companies apply both accounting oversight and stringent internal controls.
The desired results include more transparency, accountability, and
truthfulness in reporting transactions.
1 - 16
1 - 17
A1
Net Income
1 - 18
A2
Return on Assets
Return on assets (ROA) is stated in ratio form as
income divided by assets invested.
Return on assets =
Net income
Average total assets
Dell
1 - 19
End of Chapter 1