CHAPTER%2001%20POWER%20POINT%202008-1

CHAPTER%2001%20POWER%20POINT%202008-1 - CHAPTER ONE...

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CHAPTER ONE FINANCIAL REPORTING
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WHAT IS ACCOUNTING? ACCOUNTING IS A SYSTEM THAT PROVIDES INFORMATION. A BUSINESS LANGUAGE USED TO REPORT THE FINANCIAL INFORMATION (RESULTS) OF A BUSINESS. FINANCIAL INFORMATION- FINANCIAL STATEMENTS FINANCIAL STATEMENTS INCLUDE 1. BALANCE SHEET 2. INCOME STATEMENT 3. STATEMENT OF RETAINED EARNINGS 4. STATEMENT OF CASH FLOW 5. NOTES TO FINANCIAL STATEMENTS
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FORMS OF BUSINESS ORGANIZATIONS: 1. PROPRIETORSHIP 2. PARTNERSHIP 3. CORPORATION - SIMPLEST - SIMILAR -COMPLEX - PROPRIETOR - PARTNERS - SHAREHOLDER/ - 1 OWNER -2 OR MORE - 1 OR MORE CORP. INC. LTD. - SIMPLE -MUST HAVE -EASY TO RAISE AGREEMENT MONEY - UNLIMITED -UNLIMITED -LIMITED LIABILITY LIABILITY LIABLITY - OWNERS - PARTNER’S -SHAREHOLDER’S CAPITAL CAPITAL EQUITY
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PRIVATE CORPORATIONS VS PUBLIC CORPORATIONS -PUBLIC COMPANY SHARES TRADE ON STOCK MARKET. ANYONE CAN BUY/SELL SHARES. MUST ABIDE BY MORE RULES. -PRIVATE COMPANY ARE NOT TRADED PUBLICALY FRIENDS /FAMILY ARE OWNERS
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FINANCIAL STATEMENT USERS WHO ARE THE USERS AND WHAT ARE THE USES ? INTERNAL USERS: MANAGERIAL ACCOUNTING MANAGERS ……. .DETERMINE SELLING PRICES OF GOODSCONTROL COSTS, SELECTSUPPLIERS… BOARD OF DIRECTORS …..WATCH OUT FOR OWNERS BEST INTEREST: PAY DIVIDENDS,
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FINANCIAL STATEMENT USERS EXTERNAL USERS: FINANCIAL ACCOUNTING SHAREHOLDERS ....ASSESS MANAGEMENT INVESTORS ………DECIDE TO BUY OR SELL SHARES GOVERNMENT ….INCOME TAXES BANK …………….DECIDE WETHER OR NOT TO LEND MONEY CREDITORS …….SUPPLIERS WANT TO TAKE MINIMAL RISK SECURITIES EXCHANGE …..REGULATORS WHEN PUBLIC COMPANY TRADES SHARES
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ACCOUNTING STANDARDS HOW CAN I TRUST FINANCIAL STATEMENTS? WHEN F/S ARE BEING PREPARED THERE ARE RULES AND GUIDELINES THAT MUST BE FOLLOWED. HOW DO WE ENSURE ALL OF THE ABOVE? FOLLOW RULES AND GUIDELINES; CICA – CANADAIAN INSTITUTE OF CHARTERED ACCOUNTANTS- HANDBOOK GAAP- GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
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CHARACTERISTICS OF ACCOUNTING INFO F/S MUST HAVE ALL OF THE FOLLOWING FEATURES TO RENDER THEM TRUSTWORTHY & USEFUL: 1 RELEVANCE; TIMELY INFORMATION 2 RELIABLE; TRUTHFUL INFORMATION 3 COMPARABILITY: USE OF THE SAME RULES AND STANDARDS 4 UNDERSTANDABLE; NOT ALL USERS ARE ACCOUNTANTS
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CONCEPTS CONSERVATISM- TAKES FIRST PLACE OVER MOST RULES. -ACCOUNTANTS DO NOT TAKE RISK.
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CHAPTER%2001%20POWER%20POINT%202008-1 - CHAPTER ONE...

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