discussion 1 - The discussion in this area will revolve...

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The discussion in this area will revolve around what accounting is, who the key parties in the financial reporting process are, the role of generally accepted accounting principles in the preparation of financial statements, and the regulatory environment of financial reporting in the U.S. The information being discussed here will be found partly in chapter 1 and partly in chapter 2 Accounting is the information system that identifies, records, and communicates the economic events of an organization to interested users. Accounting is the useful way for reporting financial information about a business company to many different groups of people. The key parties in the financial reporting process are internal users and external users. The internal users of accounting information are managers who plan, organize, and run a business. These include marketing managers, production supervisors, finance directors, and company officers. Examples include financial comparisons of operating alternatives, the price for new products, projections of income from new sales campaigns, forecasts of cash needs for the next year and financial statements. The external users are those outside the business who have either a present or potential direct financial interest (investors and creditors) or an indirect financial interest (taxing authorities, regulatory agencies, labor unions, customers, and economic planners). Investors use accounting information to make decisions to buy, hold, or sell stock. Creditors such as suppliers and bankers use accounting information to evaluate the risks of selling on credit or lending money. Taxing authorities, such as the Internal Revenue Service, want to know whether a company like General Motors will continue to honor product warranties and
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discussion 1 - The discussion in this area will revolve...

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