chapter 1 ntoes

chapter 1 ntoes - I. Importance of accounting A. Accounting...

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I. Importance of accounting A. Accounting is. .. 1. Providing information about what businesses owe and how they preform 2. Identifying, recording, and communicating relevant, reliable and comparable information about an organization's business activities a) Identifying: finding relevant business transactions b) Recording: logging transactions c) Communicating: preparing reports and financial statements as well as analyzing and interpreting such reports 3. The language of business 4. Roles of accounting have changed as technology has changed a) Expanded the role of accounting B. Users of accounting information 1. External information users: not directly involved with running the organization a) Financial accounting serves external users with general-purpose financial statements * Creditors loan money; use statements to determine how likely an organization is to repay its loans * Shareholders own a corporation; use statements to decide whether to buy, hold or sell stock * External auditors examine financial statements to verify that financial statements adhere to the generally accepted accounting principles * Regulators have legal authority over certain activities of organizations * Suppliers use statements to judge the soundness of a costumer before making sales on credit * Costumers use financial statements to assess the staying power of potential suppliers 2. Internal information users: manage and operate an organization to improve efficiency and effectiveness a) Monitor and control company activities by protecting property and ensuring efficiency and reliability b) Managerial accounting serves the decision making needs of internal users * Research and development managers use statements to project costs and
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revenues * Purchasing managers use statements to decide how much of what supply to purchase * Human resource managers use statements to determine worker's compensation * Production managers monitor costs and ensure quality C. Opportunities in accounting 1. Certified public accountant (CPA)
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This note was uploaded on 02/09/2012 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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chapter 1 ntoes - I. Importance of accounting A. Accounting...

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