1-1

Chapter

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ACCOUNTING:
INFORMATION FOR
DECISION MAKING

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Basic
Basic Functions
Functions of
of an
an Accounting
Accounting
System
System

1-2

Interpret
and record
business
transactions.
Payment

Car
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The McGraw-Hill Companies, Inc.

Basic
Basic Functions
Functions of
of an
an Accounting
Accounting
System
System
Interpret
and record
business
transactions.

McGraw-Hill/Irwin

Classify
similar
transactions
into useful
reports.

1-3

Summarize
and
communicate
information to
decision
makers.

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1-4

Types
Types of
of Accounting
Accounting Information
Information

Financial

Tax

Managerial

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The McGraw-Hill Companies, Inc.

External
External Users
Users of
of Accounting
Accounting
Information
Information

1-5

Owners
Creditors
Labor unions
Governmental agencies
Suppliers
Customers
Trade associations
General public
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The McGraw-Hill Companies, Inc.

Users
Users of
of Internal
Internal Accounting
Accounting
Information
Information

1-6

Board of directors
Chief executive officer (CEO)
Chief financial officer (CFO)
Vice presidents
Business unit managers
Plant managers
Store managers
Line supervisors

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The McGraw-Hill Companies, Inc.

Information
Information System
System

Information
Information
Users
Users
Investors
Investors
Creditors
Creditors
Managers
Managers
Owners
Owners
Customers
Customers
Employees
Employees
Regulators
Regulators
-SEC
-SEC
-IRS
-IRS

McGraw-Hill/Irwin

Financial
Financial
Information
Information
Provided
Provided
Profitability
Profitability
Financial
Financial
position
position
Cash
Cashflows
flows

1-7

Decisions
Decisions
Supported
Supported
Performance
Performance
evaluations
evaluations
Stock
Stock
investments
investments
Tax
Taxstrategies
strategies
Labor
Laborrelations
relations
Resource
Resource
allocations
allocations
Lending
Lending
decisions
decisions
Borrowing
Borrowing

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1-8

(Specific)

Provide information about economic

resources, claims to resources, and
changes in resources and claims.

Provide information useful in

assessing amount, timing and
uncertainty of future cash flows.

Objectives
of
Financial
Reporting

Provide information useful in making

investment and credit decisions.
(General)
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The McGraw-Hill Companies, Inc.

Objectives
Objectives of
of External
External Financial
Financial
Reporting
Reporting

1-9

Balance Sheet
Income Statement
Statement of Cash Flows

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The primary
financial
statements.

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1-10

End
End of
of Chapter
Chapter 11

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The McGraw-Hill Companies, Inc.