Chapter_1_Power_Poin - Chapter 1 Uses of Accounting Information and Financial Statements LO 1 What is accounting An information system that

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Chapter 1 “Uses of Accounting Information and Financial Statements”
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LO 1 What is accounting? An information system that measures, processes, and communicates financial information about an identifiable economic entity.” (p. 27) “Communicates” financial information to whom ? To decision makers.
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LO 2 Decision makers? Anyone with a direct or indirect financial interest in the company. - investors (stockholders = shareholders) - creditors (banks, individuals, mutual funds, other companies, etc.) - tax authorities (the IRS, state tax authorities, etc.) - regulatory agencies (the SEC, the PCAOB, etc.) See last slide for abbreviations. - employees, managers - others (consumers, environmental agencies, etc.)
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LO 3 – Accounting measurement Four basic questions: 1) What is measured? Business transactions that affect the financial position of the entity. 2) When should the measurement be made? See Chapter 2. 3) What value should be placed on what is measured? See Chapter 2. 4) How should what is measured be classified? See Chapter 2.
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LO 3 Business transactions: - Involve an exchange of value: purchase, sale, payment, collection, etc . - Events that have the same effect as an exchange of value: loss from fire, flood, theft, physical wear and tear on equipment, accumulation of interest, etc .
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Money Measure: - Recording all business transactions in terms of money. -
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This note was uploaded on 12/14/2009 for the course BUSINESS bus 203c taught by Professor Milankas. during the Spring '09 term at American University in Bulgaria.

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Chapter_1_Power_Poin - Chapter 1 Uses of Accounting Information and Financial Statements LO 1 What is accounting An information system that

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