ch 1 LN Introduction

ch 1 LN Introduction - 1-1Chapter 1: Financial...

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Unformatted text preview: 1-1Chapter 1: Financial ReportingLearning Objectives1.Describe the purpose of financial reporting and identify the primary financial statements.1.Understand the significance of the FASBs conceptual framework in outlining the qualities of good accounting information, defining terms such as asset and revenue, and providing guidance about appropriate recognition, measurement, and reporting.1.Identify career opportunities related to accounting and financial reporting and understand the importance of personal ethics in the practice of accounting.1-2Describe the purpose of financial reporting and identify the primary financial statements.OBJECTIVE 1Accounting 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 decisionsin making reasoned choices among alternative courses of action. Statement of the Accounting Principles Board No. 4, par. 40.1-3Users of Accounting InformationStakeholders are all parties interested in the financial health of a company.Internal users make decisions that directly affect the internal operations of the enterprise.External users make decisions concerning their relationship to the enterprise.1-4Major Components of Financial StatementsThe balance sheet reports, as of a certain point in time, the resources of a company (the assets), the companys obligations (the liabilities), and the equity of the owners.The income statement reports, for a certain interval, the net assets generated through business operations (revenues), the net assets consumed (the expenses), and the difference (net income).1-5The statement of cash flows reports, for a certain interval, the amount of cash generated and consumed by a company through operating, financing, and investing activities.Major Components of Financial StatementsOthers:-Notes to financial statements.-Auditors Opinion1-6Auditors RoleAuditors, working independently of a companys management and internal accountants, examine the financial statements.They issue an auditors opinion about the fairness of the statements and their adherence to proper accounting principles.1-7Understand the significance of the conceptual frameworkin outlining the qualities of good accounting information, defining terms such as assetand revenue, and providing guidance about appropriate recognition, measurement, and reporting....
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ch 1 LN Introduction - 1-1Chapter 1: Financial...

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