f18 - Using Accounting Information Information Business...

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Unformatted text preview: Using Accounting Information Information Business Planning Activities Business s Individual Point of View s Business Point of View – Planning – Budgeting Accounting Information System Accounting Resources and procedures in a Resources business business Accounting Information System Accounting Resources and procedures in a Resources business that change economic data data Accounting Information System Accounting Resources and procedures in a Resources business that change economic data into financial information data Users of Accounting Information Information s Owners s Lenders s Labor Organizations s Customers s Society groups s Government Regulatory Agencies Entity Concept Entity Any organization unit for which we Any gather and process gather Entity Concept Entity Any organization unit for which we Any gather and process financial and economic data economic Entity Concept Entity Any organization unit for which we Any gather and process financial and economic data for the purpose of decision making decision Types of Ownership Types s Single proprietorship s Partnership s Corporation Financial Statements Financial s Balance Sheet s Income Statement s Statement of Cash Flows Balance Sheet Balance s Summarizes Summarizes assets, liabilities, and owners’ equities as of a specific moment in time moment – Assets - economic resources or items Assets of value a business owns of – Liabilities - claims against the assets Liabilities by nonowners by – Owners’ equity - claims against the Owners’ assets by owners assets Basic Accounting Equation Basic Assets = Liabilities + Owners’ Equity Income Statement Income s Presents Presents the results of operations for a period of time for – Revenues - inflow of assets from Revenues performing services or selling goods performing – Expenses - use of assets or Expenses incurrence of liabilities when earning revenues revenues Statement of Cash Flows Statement s Presents Presents the reasons why cash on the balance sheet changed from one date to another one s Presents cash flows from – Operating activities – Investing activities – Financing activities Published Annual Reports Published s Letter to stockholders s Management’s discussion and Management’s analysis analysis s Financial statements and notes s The report of the independent The accountant accountant Analyzing Information Analyzing s Common-size statement – Express each item as a percent of the Express total for that statement total »Balance sheet - total assets »Income statement - total revenues Balance Sheet Analysis Balance s Are total assets higher or lower? s What is percent change in total What assets? assets? s Is the percent of total liabilities to Is total liabilities plus owner’s equity increasing or decreasing? increasing Income Statement Analysis Income s Are revenues higher or lower? s What is the precentage change in What total revenues? total s Is the percentage of total expenses Is to total revenues increasing or decreasing? decreasing? Integrative Analysis Integrative s Is Is the business operating efficiently by using the least amount of asset investment to generate a given level of total revenues? level s Calculate Total Asset Turnover – Total revenues – divided by – Average total assets ...
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This note was uploaded on 02/11/2011 for the course ACG 2021 taught by Professor Mcdonald during the Spring '08 term at University of Florida.

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