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Unformatted text preview: Chapter Chapter 1 Financial Statements and Business Decisions ACCT 2010 Fall 2011 Professor Allen Huang Chapter One Slide 1 Class Objective • Have a general idea about business operations • Identify the players in the accounting communication process 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) • Be introduced to the balance sheet equation, income statement equation, retained earnings equation and cash flow equation. Chapter One Slide 2 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 Inputs Final Product Customer Value added Outputs Chapter One Slide 3 The Business Operations • Manufacturer – Makes the products it sells • Service organization – Provide service rather than manufacture products – Finance, insurance, real estate insurance real estate – Merchandising business • Buy goods, then sells them to customers • Retail or wholesale Chapter One Slide 4 Overview of Business Activities Goals and Strategies Investing Business Activities Financing Operating Chapter One Slide 5 Understanding the Business – The Players Managers may or may not be owners. Managers Creditors lend money for a specific period of time and gain by charging interest on the money they lend. Creditors Investors buy ownership in the company in the form of stock. Investors Chapter One Slide 6 The Accounting System Accounting System Financial Accounting System Managerial Accounting System Periodic financial statements and related disclosures Detailed plans and continuous performance reports External Decision Makers Internal Decision Makers Shareholders, creditors, suppliers, customers, etc. Managers throughout the organization Chapter One Slide 7 External Uses of Financial Statements Marketing managers and credit managers use customers’ financial statements to decide whether to extend cr...
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This note was uploaded on 12/20/2011 for the course ACCT/MGMT 2010 taught by Professor A during the Spring '11 term at HKUST.

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