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Whbc01 Final
Whbc01 Final
Accounting
Accounting is a language of business.
Its basic purpose is to serve as a means of
communication.
“It is a systematic process of recording,
classifying, summarizing the Business
Transactions & Events of Financial
Characters, and Interpreting the results
thereof.”
Forms of Business:
1)Nature of Work
2)On the basis of Ownership
1
Accounting
Information for Decision Making
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
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
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
Types
Types of
of Accounting
Accounting Information
Information
Financial Tax
Managerial
LO2
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
Accounting
Accounting Systems
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
Information Financial
Financial Decisions
Decisions
Users
Users Information
Information Supported
Supported
Investors
Investors Provided
Provided
Performance
Performance
Creditors evaluations
Creditors Profitability
Profitability evaluations
Managers
Stock
Managers Financial
Financial Stock
Owners
Owners position investments
investments
position
Customers
Tax
Taxstrategies
Customers Cash
Cashflows
flows strategies
Employees
Employees
Labor
Laborrelations
relations
Regulators
Regulators
Resource
Resource
-SECP
-SECP allocations
allocations
Lending
Lending
decisions
decisions
Borrowing
Borrowing
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
Basic
Basic Functions
Functions of
of an
an Accounting
Accounting
System
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
LO3
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
External
External Users
Users of
of Accounting
Accounting
Information
Information
•Owners
•Creditors
•Potential investors
•Labor unions
•Governmental agencies
•Suppliers
•Customers
•Trade associations
•General public
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
(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
Basedonon Historical
Historical in
in
General-Purpose
General-Purpose Nature
Nature
Assumption
Assumption
Results
Resultsfrom
fromInexact
Inexactand
and
Approximate
ApproximateMeasures
Measures
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
Learning
Learning Objective
Objective
LO4
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
Users
Users of
of Internal
Internal Accounting
Accounting
Information
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
Tohelp
helpachieve
achieve
goals
goalsand
andmissions
missions
To
Tohelp
helpevaluate
evaluate
and
andreward
reward
decision
decisionmakers
makers
Timeliness
Timeliness
Identify
Identify
AAMeans
Meanstoto Decision
Decision
an
anEnd
End Maker
Maker
Measures
Measuresof of Oriented
Oriented
Efficiency
Efficiencyand
and Toward
Toward
Effectiveness
Effectiveness Future
Future
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
Integrity
Integrity of
of Accounting
Accounting Information
Information
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
LO6
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
Integrity
Integrity of
of Accounting
Accounting Information
Information
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)
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
Integrity
Integrity of
of Accounting
Accounting Information
Information
To discuss various
career opportunities in
accounting.
LO8
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
Careers
Careers in
in Accounting
Accounting
Public Accounting
Management Accounting
Governmental Accounting
Accounting Education