AC300seminar2[1] - AC 300 Click to edit Master subtitle...

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Click to edit Master subtitle style 5/20/10 AC 300 Seminar 2
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5/20/10 Accounting, the "language of business," has been described as the process of identifying, measuring, recording, and communicating economic information to permit informed judgments and decisions by users of information. Accounting provides a link between the economic activities of a company and decision makers who are interested in the company. These decision makers who use accounting information can be divided into two major groups: external users (such as investors) and internal users (the company's management). Because of their different relationships to the company, the two groups
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5/20/10 External users include, for example, actual and potential investors in stocks and bonds, creditors, employees, taxing and regulatory authorities, financial analysts, and the general public. Investors need accounting information on a timely basis for three basic decisions: the buy , hold , and sell decisions. Creditors need timely information for decisions on extending and continuing credit. Published financial statements are a primary source of information for investment and credit decisions, which should be continuously reevaluated.
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5/20/10 In capital markets , investors exchange capital for the stocks and bonds of companies. Exchanges between investors themselves are made in secondary markets , such as the New York and American Stock Exchanges and NASDAQ. Companies deal directly with investors in primary markets , by borrowing from lending institutions or issuing capital stock or bonds. Primary markets include both public offerings and private placements. Public offerings involve advertising and sales of stocks or bonds to the general public, while in private placements , advertising and sales are directed to a limited number of institutions, such as
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5/20/10 Internal users are the company's managers. Managers may request any information that the accounting system can provide, in any format, to use in short-term and long-term planning and control.
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5/20/10 Financial accounting is the information accumulation, processing, and communication system designed to provide investment and credit decision-making information for external users. Financial accounting information is presented in published financial statements.
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5/20/10 Financial reporting is the process of communicating financial accounting information about a company to external users, primarily through the company's annual report
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AC300seminar2[1] - AC 300 Click to edit Master subtitle...

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