Introduction to Using Accounting Information

Introduction to Using Accounting Information - Using...

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Unformatted text preview: Using Accounting Information Business Planning Activities s Individual Point of View s Business Point of View Planning Budgeting Accounting Information System Resources and procedures in a business Accounting Information System Resources and procedures in a business that change economic data Accounting Information System Resources and procedures in a business that change economic data into financial information Users of Accounting Information s Owners s Lenders s Labor Organizations s Customers s Society groups s Government Regulatory Agencies Entity Concept Any organization unit for which we gather and process Entity Concept Any organization unit for which we gather and process financial and economic data Entity Concept Any organization unit for which we gather and process financial and economic data for the purpose of decision making Types of Ownership s Single proprietorship s Partnership s Corporation Financial Statements s Balance Sheet s Income Statement s Statement of Cash Flows Balance Sheet s Summarizes assets, liabilities, and owners' equities as of a specific moment in time Assets - economic resources or items of value a business owns Liabilities - claims against the assets by nonowners Owners' equity - claims against the assets by owners Basic Accounting Equation Assets = Liabilities + Owners' Equity Income Statement s Presents the results of operations for a period of time Revenues - inflow of assets from performing services or selling goods Expenses - use of assets or incurrence of liabilities when earning revenues Statement of Cash Flows s Presents the reasons why cash on the balance sheet changed from one date to another s Presents cash flows from Operating activities Investing activities Financing activities Published Annual Reports s Letter to stockholders s Management's discussion and analysis s Financial statements and notes s The report of the independent accountant Analyzing Information s Common-size statement Express each item as a percent of the total for that statement Balance sheet - total assets Income statement - total revenues Balance Sheet Analysis s Are total assets higher or lower? s What is percent change in total assets? s Is the percent of total liabilities to total liabilities plus owner's equity increasing or decreasing? Income Statement Analysis s Are revenues higher or lower? s What is the precentage change in total revenues? s Is the percentage of total expenses to total revenues increasing or decreasing? Integrative Analysis s Is the business operating efficiently by using the least amount of asset investment to generate a given level of total revenues? s Calculate Total Asset Turnover Total revenues divided by Average total assets ...
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This note was uploaded on 06/01/2010 for the course ACC 1000 taught by Professor Lee during the Spring '10 term at École Normale Supérieure.

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