introduction_partial_3465b05d3a609fc5b85b9edd25771f35.pdf - EM 501 Management Accounting and Engineering Economics Introduction to Accounting ˙Ismail

introduction_partial_3465b05d3a609fc5b85b9edd25771f35.pdf -...

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EM 501 Management Accounting and Engineering Economics Introduction to Accounting ˙ Ismail Serdar Bakal Middle East Technical University Department of Industrial Engineering (METU/IE) EM 501 Introduction 1 / 18
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What is accounting? Inst. Certified Pub. Accountants: Accounting is the art of recording , classifying , and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character , and interpreting the results thereof. A broader perspective: Accounting is the process of identifying, measuring, and communicating economic information to permit informed judgements and decisions by users of the information. Quantitative information: Accounting is a service activity. Its function is to provide quantitative information , primarily financial in nature about economic entities that is intended to be useful in making economic decisions, in making reasoned choices among alternative courses of action, alternative uses of resources etc. (METU/IE) EM 501 Introduction 2 / 18
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What is accounting? Accounting is a link between business activities and decision makers Measurement Processing Communication Business Activities Decision Makers Action Information Needs Data Information (METU/IE) EM 501 Introduction 3 / 18
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Business Activities - Flow of Business (METU/IE) EM 501 Introduction 4 / 18
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Bookkeeping versus Accounting Bookkeeping Routine function of Collecting Recording Reporting operating & financial information of the firm Vital Clerical Accounting Includes design of information systems that meets users’ needs Analysis of data Interpretation of data Problem solving (METU/IE) EM 501 Introduction 5 / 18
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Users of Accounting Internal usage: Management Accounting Creating reports for controlling costs measuring performance
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