Lecture 1 Introduction to Financial Statements

Lecture 1 Introduction to Financial Statements - Lecture1...

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Click to edit Master subtitle style   ©  Xiaohui Liu, 2009 Lecture 1 Introduction to Financial Accounting
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  ©  Xiaohui Liu, 2009 OBJECTIVES:  Be able to answer the following questions: What is accounting? What are different types of accounting? Difference between  financial  accounting and  management   accounting. What are  financial  statements? What are the relationship of these statements? How does economic activities affect statements?
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  ©  Xiaohui Liu, 2009 A simple illustration of  business cycle Raises Capital Invests Capital Earns Return Reinvests Pays dividend Owner’s  Investment Borrow Inventory Office  Supplies Cash Revenue -  Expense =Net  Income    (or Loss)
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  ©  Xiaohui Liu, 2009 Parties participate in the  business cycle Owners Creditors Suppliers Customers Managers Investors
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  ©  Xiaohui Liu, 2009 Accounting as an Aid to  Decision Making Accounting information is useful to anyone who  makes decisions that have economic results. Owners: Which employees are productive? Managers: Is the new product profitable? Potential Investors: Is this company a good  investment? IRS : Is taxable income measured properly?  
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  ©  Xiaohui Liu, 2009 What is Accounting? Accounting is the process of identifying,  measuring and communicating economic  information to various users. Accounting is the “language of business”.
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  ©  Xiaohui Liu, 2009 Four Major Fields in  Accounting Financial Accounting Management Accounting Tax Accounting Accounting for Non-Profit Organization
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  ©  Xiaohui Liu, 2009 Financial Accounting vs.  Management Accounting Financial Accounting  - branch of 
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