Accounting The Language of Business Myles Stern PhD CMA BA...

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Accounting: The Language of Business Myles Stern, PhD, CMA BA 2020 November 14, 2016
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What we’ll cover today Fundamentals of financial accounting The rest of our conversation requires a basic understanding of these topics. The most widely-used financial statements Recording financial transactions The accounting cycle The regulatory environment of accounting Important decisions supported by management accounting (time permitting) What do accountants really do? Career opportunities Professional certification in accounting
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All business managers need to understand accounting. Accounting truly is the “language of business”! You must be able to: Read and interpret financial statements Understand an operating (performance) report for your area Prepare a budget for your area Understand and follow internal controls Use financial data appropriately to make decisions
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Many of the following slides are based on content in the textbook used in ACC 3010 and 3020. Accounting: Tools for Business Decision Makers , 6th Edition, by Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Wiley, 2016
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FORMS OF BUSINESS ORGANIZATION Accounting fundamentals Source: Kimmel
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External Users USERS AND USES OF FINANCIAL INFORMATION Note that shareholders, the legal owners of a corporation, are using considered to be “outsiders.” Source: Kimmel Government agencies are also external users of financial information.
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USERS AND USES OF FINANCIAL INFORMATION Internal Users Source: Kimmel
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All businesses conduct three types of activities — financing, investing, and operating. The accounting information system keeps track of the results of these business activities. Source: Kimmel
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FINANCING ACTIVITIES Two primary sources of outside funds are: 1. Debt: Borrowing money Amounts owed are called liabilities. Party to whom amounts are owed are creditors. Notes/loans payable and bonds payable are different types of liabilities (legal distinctions). 2. Equity: Issuing (selling) shares of stock for cash “Common stock” is the term used to describe the shares they purchase. Payments to stockholders are called “dividends .” Source: Kimmel
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INVESTING ACTIVITIES Purchases of resources a company needs to operate Computers, delivery trucks, furniture, buildings Resources owned by a business are called assets . Investments are another example of an investing activity. Marketable securities Long-term investments in related companies Source: Kimmel
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OPERATING ACTIVITIES Once a business has the assets it needs, it can begin its operations. Revenues - Amounts earned from the sale of products and other sources (sales revenue, service revenue, and interest revenue).
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