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The Basis for Business Decisions
Sixteenth Edition

Williams

Haka

Bettner

Carcello

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
McGraw-Hill/Irwin Copyright © 2012 The McGraw-Hill Companies, Inc.

Accounting
Information for Decision Making
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
McGraw-Hill/Irwin

The Accounting Process

Economic Activities

Accounting links decision makers with economic activities  and with the results of their decisions.

Accounting Information

Actions (decisions)

Decision Makers

Reported Results of Actions (decisions)
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1-2 Types of Accounting Information Financial Tax Management 1-4 Accounting Systems An accounting system consists of the personnel. procedures. 1-5 Information System Information Users Investors Creditors Managers Owners Customers Employees Regulators -SEC -IRS -FTC Financial Information Provided Profitability Financial position Cash flows Decisions Supported Performance evaluations Stock investments Tax strategies Labor relations Resource allocations Lending decisions Borrowing 1-6 . and records used by an organization to develop accounting information and to communicate this information to decision makers. technology.

Balance Sheet Statement of Cash Flows 1-9 Income Statement . Summarize and communicate information to decision makers. 1-7 External Users of Accounting Information •Owners •Creditors •Potential investors •Labor unions •Governmental agencies •Suppliers •Customers •Trade associations •General public 1-8 Objectives of External Financial Reporting The primary financial statements. Classify similar transactions into useful reports.1-3 Basic Functions of an Accounting System Interpret and record business transactions.

1-4 Users of Internal Accounting Information Board of directors Chief executive officer (CEO) Chief financial officer (CFO) Vice presidents Business unit managers Plant managers Store managers Line supervisors 1-10 Competence. 1-11 What About Bookkeeping? Bookkeeping is the clerical side of accounting— the recording of routine transactions and day-today record keeping. Professional accountants are involved more with the interpretation and use of accounting information than with its actual preparation. Judgment and Ethical Behavior Certified Public Accountant (CPA) Certified Management Accountant (CMA) Certified Internal Auditor (CIA) Ethical behavior is the cornerstone of the accounting profession. 1-12 .

1-5 I’m Not An Accounting Major Accounting is the language of business. 1-13 End of Chapter 1 1-14 . and trying to run a business without understanding accounting information is analogous to trying to play sports without understanding the rules.