Chapter 16

Chapter 16 - Introduction to Business . Minneapolis...

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Introduction to Business Instructor: Dave Skogstrom Office: Management Education Center, Room 1050 Phone: 612-659-6422 Email: [email protected] .
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Introduction to Business Instructor: Dave Skogstrom Office: Management Education Center, Room 1050 Phone: 612-659-6422 Email: [email protected] .
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Chapter 16 Understanding Accounting and Financial Statements L e a r n i g   G o l s Explain the functions and importance of accounting. Identify the three basic activities involving accounting. Describe the roles played by public, management, government and not-for-profit accountants. Outline the steps in the accounting process. Explain the three principal financial statements. Discuss how financial ratios are used to analyze a firm’s financial strengths and weaknesses. Describe the role of budgets in a business. Explain uniform financial statements and how exchange rates influence international accounting practices. 1 2 3 4 5 6 7 8
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Accounting Process of measuring, interpreting, and communicating financial information to support internal and external business decision making. USERS OF ACCOUNTING INFORMATION
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Open book management Sharing sensitive financial information with employees and teaching them how to understand and use financial statements. • Viewing financial information may help them better understand how their work contributes to the company’s success. • Outsiders use financial data to evaluate investment opportunities. • Accountants serve public good. • Example: Volunteer programs that provide free help for low- and middle- income senior citizens file their taxes. AARP’s Tax Aide
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BUSINESS ACTIVITIES INVOLVING ACCOUNTING • Accounting plays a key role in each of a businesses three key areas: Financing activities Provide necessary funds to start and expand a business. Investing activities Provide valuable assets required to run a business. Operating activities Focus on selling goods and services, but they also consider expenses as important elements of sound financial management.
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ACCOUNTING PROFESSIONALS Public Accountants Public accountant Accountant who works for an independent accounting firm. Certified public accountant (CPA) Accountant who meets specified educational and experiential requirements and has passed a comprehensive examination on accounting theory and practice. Management Accountants Management accountant Accountant employed by a business other than a public accounting firm. Government and Not-for-Profit Accountants • Perform professional services similar to those of management accountants.
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THE ACCOUNTING PROCESS Accounting process Set of activities involved in converting information about transactions into financial statements.
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The Impact of Computers and the Internet on the  Accounting Process • Simplifies the accounting process by automating data entry and calculations. • Software that handles accounting information for international businesses is also
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This note was uploaded on 11/26/2011 for the course BUSN 1140 taught by Professor Skogstrom during the Fall '10 term at MCTC.

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Chapter 16 - Introduction to Business . Minneapolis...

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