C01 - 1 An electronic presentation An electronic...

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Unformatted text preview: 1 An electronic presentation An electronic presentation by Douglas Cloud by Douglas Cloud Pepperdine University Pepperdine University 2 The Environment The Environment of Financial of Financial Reporting Reporting C hapter 1 3 1 . Understand capital markets and decision making. 2. Know what is included in financial reporting. 3. Explain generally accepted accounting principles (GAAP) and the sources of GAAP. 4. Identify the types of pronouncements issued by the FASB. Objectives Continued Continued 4 5. Understand how the Financial Accounting Standards Board (FASB) operates. 6. Describe the relationship between the Securities and Exchange Commission (SEC) and the FASB. 7. Use ethical models for decision making about ethical dilemmas. 8. Understand creative and critical thinking. Objectives 5 Companies need large amounts of capital for operations. 6 Companies may obtain capital by issuing capital stock... Stock Exchange 7 ... or by borrowing from lenders. Bank 8 Capital Markets Capital Markets Corporations Financial Institutions Investors Borrow money Sell stocks and bonds Primary Market (e.g., individuals, banks) Secondary Market (e.g., New York Stock Exchange) Buy and sell stocks and bonds Buy and sell stocks and bonds Investors Investors Buy and sell stocks and bonds 9 Accounting Information Economic Accounting Information Economic Activities and Decision Making Activities and Decision Making Accumu- late Accounting Information Communi- cate External User Internal User External Decisio n Making Internal Decisio n Making Companys Economic Activities Impact Impact 10 External and Internal Users External and Internal Users 1. Buy. A potential investor decides to purchase a particular security on the basis of communicated accounting information. 2. Hold. An actual investor decides to retain a particular security on the basis of communicated accounting information. 3. Sell. An actual investor decides to dispose of a particular security on the basis of communicated accounting information. 11 Comparison of Financial and Comparison of Financial and Managerial Accounting Managerial Accounting Sources of Authority Internal needs Managerial Accounting Financial Accounting GAAP 12 Time Frame of Reported Information Comparison of Financial and Comparison of Financial and Managerial Accounting Managerial Accounting Present and future Managerial Accounting Primarily historical Financial Accounting 13 Scope Comparison of Financial and Comparison of Financial and Managerial Accounting Managerial Accounting Mainly total company Financial Accounting Individual departments, divisions, and total company Managerial Accounting 14 Type of Information Comparison of Financial and Comparison of Financial and Managerial Accounting...
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C01 - 1 An electronic presentation An electronic...

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