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

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Unformatted text preview: Introduction to Accounting and Business 1 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 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. 1-3 1-4 1-4 1 1 Describe the nature of a business, the role of accounting, and ethics in business. 1-4 1-5 1-5 Types of Businesses Delta Air Lines Transportation services The Walt Disney Company Entertainment services Service Business Service 1 1-6 1-6 Merchandising Business Product Wal-Mart General merchandise Amazon.com Internet books, music, videos 1 Types of Businesses 1-7 1-7 Manufacturing Business Product General Motors Corp. Cars, trucks, vans Dell Inc. Personal computers 1 Types of Businesses 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 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 1-10 1-10 1 Exhibit 1 Users of Accounting Information 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 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 1-13 1-13 Ethics are moral principles that guide the conduct of individuals. Role of Ethics in Accounting and Business 1 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 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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This note was uploaded on 10/04/2010 for the course BUS BUTR-1023- taught by Professor Swango during the Fall '10 term at NorthWest Arkansas Community College.

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

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