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chapter 1.docx - Introduction to Accounting and Business...

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Introduction to Accounting and Business Chapter 1 Nature of Business and Accounting Business : Organization where basic resources (inputs) are assembled and processed to provide goods/services(outputs) to customers o Material/Labor Profit : difference between the amounts received from goods/services and the amount paid for inputs used to provide the goods/services Service Business Service Delta Air Lines/ Walt Disney Company Transportation/ Entertainment Merchandising Business Product Walmart/Amazon.com General Merchandise/ Internet books etc Accounting : information system that provides reports to users about the economic activates and condition of a business. o Roles of Accounting process : 1. Identify users 2. Assess user’s information needs 3. Design the accounting information system to meet users’ needs 4. Record economic data about business activities and events 5. Prepare accounting reports for users.
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Managerial accounting (Management accounting): Provides internal users (managers/employees) with information o Provide relevant and timely information for decision-making needs Private Accounting: Managerial account employed by a business are employed are called this. Financial Accounting : Provides external users (investors, creditors, customers, government) with information. o Provide relevant and timely information for decision-making needs of users outside the business General-Purpose financial statements : a type of financial accounting report that is distributed to external users .a Roles of Ethics Objective: Provide relevant, timely information for user decision making. Must behave in an ethical manner and be trustworthy. Ethics : moral principles that guide the conduct of individuals. Examples of Accounting and Business Frauds: Ex: What with wrong with these managers and companies is that they either: o Failure of individual character or Culture of greed and ethical indifference. Sarbanes-Oxley Act ( SOX ): Law passed to monitor the behavior of accounting and business. o Established standards for independence, corporate responsibility and disclosure. Public Company Accounting Oversight Board ( PCAOB ): Oversight body for the accounting profession established by SOX . Guidelines for behaving ethically : 1. Identify ethical decision using personal ethical standards of honesty and fairness
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2. Identify consequences decisions and its effect on others 3. Consider obligations and responsibilities that affect others from these decision 4. Make the decision that is ethical and fair to those affected by it Opportunities for Accountants Career opportunities
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