bfound_summary_pt_1 - B-found Summary Ch 1 Business...

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B-found Summary Ch. 1 Business- organization in which basic resources (inputs), such as materials and labor, are assembled and processed to provide goods or services (outputs) to customers Three types of businesses Service business- provides services rather than goods to customers o Delta Air Lines ( transportation) o The Walt Disney Company (entertainment) Merchandising business- sell products they purchase from other businesses to customers o Wal- Mart ( general merchandise) o (Internet books, music, videos) Manufacturing businesses- change basic inputs into products that are sold to customers o General Motors ( cars, trucks, vans) o Dell.Inc (personal computers) Accounting- information system that provides reports to users about the economic activities and condition of a business Accounting process 1. Identify users 2. Assess users’ information needs 3. Design the accounting information system to meet users’ needs 4. Record economic data about business activities and events 5. Prepare accounting reports for users Managerial accounting- provides internal users with information Provides relevant and timely information for managers’ and employees’ decision-making needs Managerial accountants employed by a business are employed in private accounting Financial accounting- provides external users with information Provide relevant and timely information for the decision-making needs of users outside of the business
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General-purpose financial statements are a type of financial accounting report used for a wide range of decision-making needs that these reports are designed to serve Ethics- moral principles that guide the conduct of individuals Accountants must behave In an ethical manner so that the information they provide will be trustworthy and useful for decision making o Managers and employees must behave in an ethical manner in managing and operating a business. Otherwise, no one will be willing to invest in or loan money to the business Generally accepted accounting principles (GAAP)-principles that financial accountants follow in preparing reports Allow investors and other users to compare one company to another Financial Accounting Standards Board (FASB) - has the primary responsibility for developing accounting principles Securities and Exchange Commission (SEC) - an agency of the U.S. government, has authority over the accounting and financial disclosures for companies whose shares of ownership (stock) are traded and sold to the public International Accounting Standards Board (IASB) - used as the generally accepted accounting principles by many countries outside of the U.S. Business entity concept- limits the economic data in an accounting system to data related directly to the activities of the business The activities of a business are recorded separately from the activities of its owner/owners, creditors, or other businesses o A business is a separate entity than its owners Proprietorship- business owned by one individual
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bfound_summary_pt_1 - B-found Summary Ch 1 Business...

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