Chapter 1 overview - IEB Wireframe Page 1 of 4 Page 2...

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Page 2 OVERVIEW The primary function of financial accounting is to provide useful financial information to users who are external to the business enterprise, particularly investors and creditors. These users make critical resource allocation decisions that affect the global economy. The primary means of conveying financial information to external users is through financial statements and related notes. In this chapter you explore important topics, such as the reason why financial accounting is useful, the process by which accounting standards are produced, and the conceptual framework that underlies financial accounting. The perspective you gain in this chapter serves as a foundation for a more detailed study of financial statements, the way the statement elements are measured, and the concepts underlying these measurements and related disclosures. LEARNING OBJECTIVES After studying this chapter, you should be able to: LO1 –1 p. 4 LO1–1 Describe the function and primary focus of financial accounting. ( p. 4 ) LO1 –2 p. 6 LO1–2 Explain the difference between cash and accrual accounting. (
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