CH.1 - School of Management Prepared by Ellen Hamer Lesson...

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Unformatted text preview: School of Management Prepared by: Ellen Hamer Lesson Notes to Accompany Financial Management 1321 INTERMEDIATE ACCOUNTING Ninth Canadian Edition KIESO, WEYGANDT, WARFIELD, YOUNG, WIECEK Chapters 1-6 11- 1 School of Management Chapter 1 The Canadian Financial Reporting Environment Characteristics of Accounting • Accounting identifies, measures, analyses, and communicates financial information to various users (decision makers) • Accounting has two broad classifications: 1. Financial accounting 2. Managerial accounting • Accounting theory and practice have evolved and will continue to evolve to meet changing demands and influences The Accounting Process includes 1. Identification, measurement, and communication of financial information about; 2. Economic entities to; 3. Interested persons. 21- 2 School of Management Financial Reporting • Financial accounting provides historical information • Financial reporting is used by both internal and external users • External users include such decision makers as investors, creditors, unions, and government agencies • Managerial accounting provides both historical and forecast information Financial Statements and Other Means of Financial Reporting Major financial statements include: • Balance Sheet • Income Statement • Statement of Cash Flows • Statement of Shareholders’ (Owners’) Equity + Note Disclosures Other forms of financial reporting include: • President’s letter • Prospectuses • Government reporting • News releases - Management forecasts 31- 3 School of Management Flow of Information through the Financial Income Statement Statement of Equity Balance Sheet Statement of Cash Flows Reports Net Income Ending balance reported Change in cash as reported displays the change in cash position Financial reporting aids users in the allocation of scarce resources (capital) Accounting and Capital Allocation • The accounting profession has the responsibility of measuring a company’s performance accurately, fairly, and on a timely basis • These measurements enable investors and creditors to compare the income and assets employed by companies • Investors can then assess the relative risks and returns associated with companies 41- 4 School of Management...
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CH.1 - School of Management Prepared by Ellen Hamer Lesson...

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