Chapter 16

Chapter 16 - Chapter 16 Tuesday, December 07, 2010 6:46 PM

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Understanding Accounting and Financial Statements Accounting is the process of measuring, interpreting, and communicating financial information to support internal and external business decision making - Accounting Open book management: sharing sensitive financial information with employee and teaching them how to understand and use financial statements - Viewing financial information may help them better understand how their work contributes to the company's success - Outsiders use financial data to evaluate investment opportunities - Open Book Management Financing activities provide necessary funds to start a business and expand it after it begins operating - Investing activities provide valuable assets required to run a business - Operating activities focus on selling goods and services, but they also consider expenses as important elements of sound financial management - Business Activities Involving Accounting Public accountants: provide accounting services to individuals or business firms for a fee - Management accountants: provide timely, relevant, accurate, and concise information that executives can use to operate their firms - Government and not- for- profit accountants - Accounting Professionals Generally accepted accounting principles (GAAP): encompass the conventions, rules, and procedures for determining acceptable accounting practices at a particular time - Financial accounting standards board (FBSB): is primarily responsible for evaluating, setting, or modifying GAAP in the U.S. - Created the public accounting oversight board, which sets audit standards and investigated and sanctions accounting firms that certify Sarbanes- Oxley Act: responded to cases of accounting fraud
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Chapter 16 - Chapter 16 Tuesday, December 07, 2010 6:46 PM

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