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Chapter+1+Slides - Chapter Chapter 1 Financial Statements...

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Chapter 1 Financial Statements and Business Decisions Slide 1 Chapter One ACCT 2010 Fall 2011 Professor Allen Huang Class Objective Have a general idea about business operations Identify the players in the accounting communication process Identify the users of accounting information Be familiar with the four basic financial statements (the purpose, info content, structures, key elements, and the relation among them) Slide 2 Chapter One Be introduced to the balance sheet equation, income statement equation, retained earnings equation and cash flow equation.
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The Business Operations Manufacturers either make the parts needed to produce its products or buy needed to produce its products or buy the parts from suppliers. Manufacturer Final Product Customer Slide 3 Chapter One Inputs Value added Outputs The Business Operations Manufacturer – Makes the products it sells Service organization – Provide service rather than manufacture products – Finance insurance real estate Slide 4 Chapter One Finance, insurance, real estate – Merchandising business Buy goods, then sells them to customers Retail or wholesale
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Overview of Business Activities Goals and Strategies Financing Investing Business Activities Slide 5 Chapter One Operating Understanding the Business – The Players Managers may or may not be owners. Managers C dit Creditors lend money for a specific period of time and gain by charging interest on the money they lend. Slide 6 Chapter One Creditors Investors Investors buy ownership in the company in the form of stock.
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The Accounting System Accounting System Financial Accounting System Periodic financial statements and related disclosures Managerial Accounting System Detailed plans and continuous performance reports Slide 7 Chapter One External Decision Makers Shareholders, creditors, suppliers, customers, etc. Internal Decision Makers Managers throughout the organization External Uses of Financial Statements Marketing managers and credit managers use customers’ financial statements to decide h th t t d dit whether to extend credit. Purchasing managers use suppliers’ financial statements to decide whether suppliers have the resources to meet our demand for products. Slide 8 Chapter One Employees’ union and human resource managers use the company’s financial statements as a basis for contract negotiations over pay rates.
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