CH 1 - CH 1 The Financial Statements Accounting is the language of business Accounting is a system that collects and processes(analyzes measures

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CH 1 – The Financial Statements Accounting is the language of business. Accounting is a system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers. WHAT IS FINANCIAL ACCOUNTING? Financial accounting is a process of identifying, recording, and communicating the economic events of interest to external users. 1) Identifying events: sale, purchase, borrowing, etc. 2) Recording: journal entries, T-accounts, trial balance, etc. 3) Communicating: income statement, balance sheet, statement of retained earnings, statement of cash flows Financial Accounting System Preparation of four basic financial statements and related disclosures Managerial Accounting System Preparation of detailed plans, forecasts, and performance reports Internal Decision Makers Managers throughout the Organization Types of Business Entities
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1. Sole proprietorship: unincorporated business owned by one person. Small in size
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This note was uploaded on 01/31/2011 for the course ACCOUNTING 301 taught by Professor Chen during the Spring '10 term at George Mason.

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CH 1 - CH 1 The Financial Statements Accounting is the language of business Accounting is a system that collects and processes(analyzes measures

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