BFOUND-CH1-PP - 1 Introduction to Accounting and Business...

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Introduction to Accounting and Business 1
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1-2 1-2 1-2 After studying this chapter, you should be able to: Introduction to Accounting and Business 3 State the accounting equation and define each element of the equation. 2 Summarize the development of accounting principles and relate them to practice. 1 Describe the nature of a business, the role of accounting, and ethics in business. 1-2
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1-3 1-3 Introduction to Accounting and Business (continued) 4 Describe and illustrate how business transactions can be recorded in terms of the resulting change in the elements of the accounting equation. 5 Describe the financial statements of a corporation and explain how they interrelate.
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1-4 1-4 1 1 Describe the nature of a business, the role of accounting, and ethics in business.
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1-5 1-5 Types of Businesses Delta Air Lines Transportation services The Walt Disney Company Entertainment services Service Business Service 1
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1-6 1-6 Merchandising Business Product Wal-Mart General merchandise Amazon.com Internet books, music, videos 1 Types of Businesses
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1-7 1-7 Manufacturing Business Product General Motors Corp. Cars, trucks, vans Dell Inc. Personal computers 1 Types of Businesses
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1-8 1-8 The Role of Accounting in Business Accounting can be defined as an information system that provides reports to users about the economic activities and condition of a business. 1
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1-9 1-9 Identify users. Assess users’ informational needs. Design the accounting information system to meet users’ needs. Record economic data about business activities and events. Prepare accounting reports for users. The process by which accounting provides information to users is as follows : 1
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1-10 1-10 1 Exhibit 1 Users of Accounting Information
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1-11 1-11 The area of accounting that provides internal users with information is called managerial accounting . Managerial Accounting The objective of managerial accounting is to provide relevant and timely information for managers’ and employees’ decision-making needs. 1
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1-12 1-12 The area of accounting that provides external users with information is called financial accounting . Financial Accounting The objective of financial accounting is to provide relevant and timely information for the decision-making needs of users outside of the business. 1
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1-13 1-13 Ethics are moral principles that guide the conduct of individuals. Role of Ethics in Accounting and Business 1
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1-14 1-14 Failure of individual character Firm culture of greed and ethical indifference The answer to “What went wrong for these companies?” (Exhibit 2) involves one or both of these factors. 1
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1-15 1-15 1 Exhibit 3 Guideline for Ethical Conduct 1. Identify an ethical decision by using your personal ethical standards of honesty and fairness.
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