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Recitation _1 - the public The Financial Accounting...

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Users of Accounting Information External Users Lenders Shareholders Governments Consumer Groups External Auditors Customers Internal Users Managers Officers Internal Auditors Sales Staff Budget Officers Controllers
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Users of Accounting Information External Users Financial accounting provides external users with financial statements. Internal Users Managerial accounting provides information needs for internal decision makers.
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Financial accounting practice is governed by concepts and rules known as generally accepted accounting principles (GAAP) . Generally Accepted Accounting Principles Relevant Information Affects the decision of its users. Reliable Information Is trusted by users. Comparable Information Used in comparisons across years & companies.
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The Securities and Exchange Commission is the government group that establishes reporting requirements for companies that issue stock to
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Unformatted text preview: the public. The Financial Accounting Standards Board is the private group that sets both broad and specific principles. The International Accounting Standards Board (IASB) issues inter-national standards that identify preferred accounting practices in other countries. The IASB does not have authority to impose its standards on companies. 1-4 Accounting Principles Net income is the difference between Revenues and Expenses. The income statement describes a company’s revenues and expenses along with the resulting net income or loss over a period of time due to earnings activities. Income Statement The net income of $2,200 increases Retained Earnings by $2,200. Statement of Retained Earnings The Balance Sheet describes a company’s financial position at a point in time. Balance Sheet Statement of Cash Flows...
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