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Chapter 17 - Chapter 17 Accounting the recording...

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Chapter 17 Accounting- the recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions Accounting system- the method used to record and summarize accounting data into reports Inputs Accounting documents Sales documents Purchasing documents Shipping documents Payroll records Bank records Travel records Entertainment records Processing 1. Entries are made into journals: recording 2. The effects of these journal entries are transferred or posted into ledgers: classifying 3. All accounts are summarized Outputs Financial statements Balance sheet
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Income statement State of cash flows Other reports (i.e.: annual reports) Users of Accounting Information and the Required Reports Users Type of Report Government taxing authorities (i.e.: IRS) Tax returns Government regulatory agencies Required reports People interested in the organization’s income and financial position (i.e.: owners, creditors, financial analysts, suppliers) Financial statements found in annual reports (i.e.: income statement, balance sheet, statement of cash flows) Managers of the firm Financial statements and various internally distributed financial reports Areas of Accounting Managerial Accounting Managerial Accounting- accounting used to provide information and analyses to managers within the organization to assist them in decision making - Concerned with measuring & reporting costs of production, marketing, and other functions; preparing budgets (planning); checking whether or not units are staying within their budgets (controlling) and designing strategies to minimize taxes Certified management accountant (CMA) - a professional accountant who has met certain educational and experience requirements, passed a qualifying exam in the field, and been certified by the Institute of Certified Management Accountants Financial Accounting Financial accounting- accounting information and analyses prepared for people outside the organization
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- The information goes to company owners, managers, employee unions, customers, suppliers, government agencies, and the general public Annual report- a yearly statement of the financial condition, progress, and expectations of an organization Private accountant- an accountant who works for a single firm, government agency, or nonprofit organization Public accountant- an accountant who provides accounting services to individuals or businesses on a fee basis Certified public accountant (CPA) - an accountant who passes a series of examinations established by the American Institute of Certified Public Accountants Auditing Auditing- the job of reviewing and evaluating the records used to prepare a company’s financial statements - Public accountants conduct independent audits of accounting information and related records Independent audit-
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