Unit 1 Lesson 1 - information in order to evaluate the...

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Accounting is defined as a system of gathering, recording, and reporting an organization's financial information in order to make decisions to improve its performance. It is important for any individual, organization, or business to develop a way to track its finances in order to provide it with information for decision-making. Accounting The five main components of an accounting system are: 1. Developing a system of gathering financial information 2. Preparing and collecting records for the business' transactions and financial dealings i.e. proofs of payments, invoices, receipts, etc. 3. Summarizing and classifying information into a practical form i.e. financial statements such as balance sheets and income statements 4. Preparing information reports for decision making by parties within and outside of the business 5. Establishing accounting controls to ensure accuracy and honesty throughout the company It is important for the owners and managers of a business to keep track of its financial
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Unformatted text preview: information in order to evaluate the performance of the business. Information that would be important to an owner or manager may include: sales figures amount spent on expenses costs of production profits earned value of assets amount of cash on hand amount of inventory on hand customer bill payments debt payments due Other parties that may be interested in the financial information of a business may be external to the company. These stakeholders and their interests may include: absentee owners interested in the performance/profitability of the business potential investor interested in the profitability and potential growth of the business banker/creditor interested in the ability of the business to repay its loans government interested in the profits earned, and the taxes paid by the business...
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This note was uploaded on 07/15/2011 for the course AFM 102 taught by Professor Aa during the Summer '07 term at Court Reporting Institute of Dallas.

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