ch01 - Chapter 1: Financial Accounting and Its Economic...

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2 Chapter 1: Chapter 1: Financial Accounting Financial Accounting and and Its Economic Context Its Economic Context
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3 The Role of Financial Reporting in The Role of Financial Reporting in Investment Decisions Investment Decisions Profit-seeking companies - managers prepare reports for owners of the companies. Owners and other interested parties (Users) - use reports to assess financial condition and performance of companies. User decisions - users obtain information from reports to make investment decisions. Effects of user decisions - decisions affect the company and its managers.
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4 Financial Reporting and Financial Reporting and Investment Decisions Investment Decisions
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5 Content of Financial Reports Content of Financial Reports The Management Letter The Financial Statements: Balance Sheet Income Statement Statement of Shareholders’ Equity Statement of Cash Flows The Footnotes The Auditor’s Report
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6 The Management Letter The Management Letter The management letter is the statement of management to the investors. It indicates: management is responsible for the preparation and content of the financial report. the statements were prepared in accordance with generally accepted accounting principles (GAAP). the company maintains a system of internal controls to safeguard assets.
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7 The Financial Statements The Financial Statements Include a balance sheet, income statement, statement of shareholders’ equity, and a statement of cash flows (discussed in a later chapter). The footnotes to the financials are
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This note was uploaded on 09/06/2010 for the course BUSINESS ACG 6025 taught by Professor Karenlivingstone during the Fall '10 term at University of South Florida - Tampa.

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ch01 - Chapter 1: Financial Accounting and Its Economic...

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