ch01(1) - 1 Accounting in Action Learning Objectives 1-1 1 Identify the activities and users associated with accounting 2 Explain the building blocks of

ch01(1) - 1 Accounting in Action Learning Objectives 1-1 1...

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1-1 Learning Objectives Identify the activities and users associated with accounting. Explain the building blocks of accounting: ethics, principles, and assumptions. State the accounting equation, and define its components. 3 Analyze the effects of business transactions on the accounting equation. 2 1 4 Describe the four financial statements and how they are prepared. 5 Accounting in Action 1
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1-2 Accounting consists of three basic activities—it identifies , records , and communicates the economic events of an organization to interested users. LEARNING OBJECTIVE Identify the activities and users associated with accounting. 1 LO 1
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1-3 Illustration 1-1 The activities of the accounting process The accounting process includes the bookkeeping function. Three Activities LO 1
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1-4 INTERNAL USERS Illustration 1-2 Questions that internal users ask Who Uses Accounting Data LO 1
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1-5 LO 1
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1-6 LO 1 Illustration 1-3 Questions that external users ask Who Uses Accounting Data EXTERNAL USERS
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1-7 DO IT! 1 Solution: 1. 2. 3. 4. 5. Indicate whether the following statements are true or false . 1. The three steps in the accounting process are identification, recording, and communication. 2. Bookkeeping encompasses all steps in the accounting process. 3. Accountants prepare, but do not interpret, financial reports. 4. The two most common types of external users are investors and company officers. 5. Managerial accounting activities focus on reports for internal users. LO 1 True False False False True Basic Concepts
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1-8 Ethics in Financial Reporting Recent financial scandals include: Enron , WorldCom , HealthSouth , AIG , and other companies. Regulators and lawmakers concerned that economy would suffer if investors lost confidence in corporate accounting. In response, Congress passed Sarbanes-Oxley Act (SOX) . Effective financial reporting depends on sound ethical behavior. LO 2 LEARNING OBJECTIVE Explain the building blocks of accounting: ethics, principles, and assumptions. 2
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1-9 Illustration 1-4 Steps in analyzing ethics cases and situations Ethics in Financial Reporting LO 2
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1-10 Ethics are the standards of conduct by which one's actions are judged as: a. right or wrong. b. honest or dishonest. c. fair or not fair. d. all of these options. Question Ethics in Financial Reporting LO 2
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1-11 LO 2
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1-12 Various users need financial information The accounting profession has developed standards that are generally accepted and universally practiced. Financial Statements Balance Sheet Income Statement Statement of Owner's Equity Statement of Cash Flows Note Disclosure Generally Accepted Accounting Principles (GAAP) Generally Accepted Accounting Principles LO 2
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1-13 Generally Accepted Accounting Principles (GAAP) Standards that are generally accepted and universally practiced. These standards indicate how to report economic events.
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  • Winter '17
  • Dr. Mahwish Anjum
  • Balance Sheet, Generally Accepted Accounting Principles, Lo, owner, Softbyte

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