ch01 - Chapter 1 The Link Between Business and Accounting...

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Unformatted text preview: Chapter 1 The Link Between Business and Accounting Objective What is accounting? Difference between financial accounting and managerial accounting. What are financial statements? What does a business do? Both For-profit and Not-for-profit firms provide values. Three main types of businesses Service, Merchandising firms and Manufacturing firms Forms of business ownerships Sole Proprietorship, Partnership and Corporation The Process of . Getting Cash Using Cash to purchase inputs Changing those inputs into products or services, and Providing the product or service to customers and eventually getting cash back Is Called an Operating Cycle Model of the Firm Raises Capital Invests Capital Earns Return Reinvests Pays dividend Why is accounting important? Do you have a car? When your car breaks down how do you decide whether to repair it or to replace it? Accounting as an Aid to Decision Making Accounting information is useful to anyone who makes decisions that have economic results. Owners: Which employees are productive? Managers: Is the new product profitable? Potential Investors: Is this company a good investment? IRS : Is taxable income measured properly? Accounting is the process of Identifying Measuring and Communicating Financial Information to various users, both inside and outside of the company Much of this information is communicated with Financial Statements Four Major Fields in Accounting Financial Accounting Managerial Accounting Tax Accounting Accounting for Non-Profit Organization Financial Accounting is concerned with satisfying the needs of External Users External Users Government Creditors Potential Investors Vendors, Customers and Employees Managerial Accounting is concerned with...
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ch01 - Chapter 1 The Link Between Business and Accounting...

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