Chapter 1 Outline - Chapter 1 page 1 of 8 Chapter 1:...

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Chapter 1 page 1 of 8 Chapter 1: Financial Accounting and Accounting Standards Definitions: Accounting : Financial Accounting : Financial Statements : The principal way to communicate financial information to outside parties. Typically include: 1. 2. 3. 4. - Footnotes (FN) are important, too! Note: This text focuses on (1) the basic financial statements and (2) related disclosures Accounting and Capital Allocation (see Illustration 1-1 on page 3 of textbook.) Financial Reporting : Financial Statement Users : Capital Allocation : From: markdawkins.com/uploads/Ch1_Class_Outline.doc
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Chapter 1 page 2 of 8 The Challenges Facing Financial Accounting Non-financial Measurements : Important measurements used to assess a company’s future stability that are often provided on an ad hoc basis by management (e.g., customer satisfaction, backlog info, etc.) Forward-looking Information : Financial statements do not provide forward-looking information that would be helpful for financial statement users. While this information would be relevant, reliability would be questionable. Soft Assets : Include so called “unrecorded assets” such as knowledge, market dominance, employees, brand names, etc. Timeliness : Financial Statements are provided quarterly and (audited) annually. Objectives of Financial Reporting (Found in Statement of Financial Accounting Concept No. 1 – SFAC1.) 1) 2) 3) Homework: Q2, 5, 6 Parties Involved in Standards Setting 1) Securities and Exchange Commission (SEC) 2) American Institute of Certified Public Accountants (AICPA) 3) Financial Accounting Standards Board (FASB) – 1973-present 4) Governmental Accounting Standards Board (GASB) 5) Previous Major Organizations From: markdawkins.com/uploads/Ch1_Class_Outline.doc
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Chapter 1 page 3 of 8 a Committee on Accounting Procedure (CAP) – 1939-1959; published 51 Accounting Research Bulletins (ARB) b Accounting Principles Board (APB) – 1959-1973; Issued 31 Opinions and 4 statements Securities and Exchange Commission (SEC) – Standard setting in the public sector 1) SEC developed in response to the stock market crash of 1929 and the Great Depression. Public wanted increased government regulation and oversight of businesses, financial institutions, and stock market. 2) SEC administers the Securities Exchange Act of 1934 and several other acts. SEC requires companies who issue securities to the public or are listed on securities exchanges to file audited financial statements. a
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This note was uploaded on 09/01/2011 for the course BUSINESS 101 taught by Professor - during the Spring '11 term at Mississippi Valley State University.

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Chapter 1 Outline - Chapter 1 page 1 of 8 Chapter 1:...

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