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Unformatted text preview: Chapter 17 Accounting - The Importance of Accounting Information o What is Accounting? Accounting The recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions Businesses transactions are usually classified into groups The Accounting system Inputs (accounting documents) o Sales documents, purchasing documents, shipping documents Processing o Entries are made into journals o The effects of these journal entries are transferred or posted into ledgers o All accounts are summarized Outputs (Financial Statements) o Balance sheet o Income statement o Statement of cash flows and other reports- Areas of Accounting o Managerial Accounting Accounting used to provide information and analyses to managers within the organization to assist them in decision making Cost of production, marketing, preparing budgets, Certified Management Accountant (CMA) Professional accountant who has met certain educational and experience requirements, passed a qualifying exam in the field, and been certified by the institute of CMAs o Financial Accounting Accounting information and analyses prepared for people outside the organization Annual Report Yearly statement of the financial condition, progress, and expectations of an organization Private Accountant An accountant who works for a single firm government agency, or non-profit organization Public Accountant An accountant who provides accounting services to individuals or businesses on a fee basis Certified Public Accountant Passes a series of examination established by the American Institute of Certified Public Accountants o Auditing the job of reviewing and evaluating the records used to prepare a companys financial statements Private accountants within an organization often perform internal audits Certified Internal Auditor Accountant who has a bachelors degree and two years of experience in internal auditing, and who has passed an exam administered by the Institute of Internal Auditors...
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- Spring '07