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Financial Accounting: Williams Haka Bettner Carcello
Financial Accounting: Williams Haka Bettner Carcello
Financial Accounting
THIRTEENTH EDITION
Chapter
1
Accounting
Information for Decision Making
Learning Objective
To discuss accounting
as the language of
business and the role of
accounting information
in making economic
decisions.
LO1
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
1-4
The
accounting
process
Accounting
“links” decision
makers with Accounting
Economic
economic
activities information
activities and
with the results of
their decisions.
Actions
(decisions) Decision
makers
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1-5
Financial Tax
Managerial
Learning Objective
LO2
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1-7
Accounting Systems
An accounting system consists of the personnel,
procedures, technology, and records used by an
organization to develop accounting information
and to communicate this information to decision
makers.
Information System
Interpret Classify
and record similar
business transactions
transactions. into useful Summarize
reports. and
communicate
information to
decision
makers.
Risk
Assessment
Control
Activities
Information and
Communication
Monitoring
Learning Objective
LO3
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
1-12
External Users of Accounting
Information
•Owners
•Creditors
•Potential investors
•Labor unions
•Governmental agencies
•Suppliers
•Customers
•Trade associations
•General public
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
1-13
(Specific)
Provide information about economic Objectives
resources, claims to resources, and
changes in resources and claims.
of
External
Financial
Provide information useful in
Reporting
assessing amount, timing and
uncertainty of future cash flows.
Balance Sheet
Income Statement
The primary
Statement of Cash Flows
financial
statements.
Based on
Historical in
General-Purpose
Nature
Assumption
Learning Objective
LO4
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1-17
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
Typical
Board of
Directors Simple
Organization
Chief Executive
Officer Chart
(CEO)
Plant Plant
Managers Managers Controller Treasurer
Plant Plant
Accountants Accountants
To help achieve
goals and missions
To help evaluate
and reward
decision makers
Timeliness
Identify
A Means to Decision
an End Maker
Measures of Oriented
Efficiency and Toward
Effectiveness Future
Learning Objective
To discuss elements of
the system of external
and internal financial
reporting that create
integrity in the reported
information.
LO5
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
1-22
Institutional Features
Generally Accepted Accounting Principles (GAAP)
Financial Accounting Standards Board
International Accounting Standards Board
Securities and Exchange Commission
Public Company Accounting Oversight Board
Audits of Financial Statements
Legislation
Learning Objective
LO6
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
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Professional Organizations
American Institute of Certified Public Accountants
Institute of Management Accountants
Institute of Internal Auditors
American Accounting Association
Committee of Sponsoring Organizations of the
Treadway Commission (COSO)
Learning Objective
To discuss the
importance of personal
competence,
professional judgment,
and ethical behavior on
the part of accounting
professionals.
LO7
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
1-26
Learning Objective
To discuss various
career opportunities in
accounting.
LO8
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1-28
Careers in Accounting
Public Accounting
Management Accounting
Governmental Accounting
Accounting Education
End of Chapter 1