Chapter 1 Study Outline - CHAPTER 1-STUDY OUTLINE Uses of...

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CHAPTER 1-STUDY OUTLINE Uses of Accounting Information and the Financial Statements Accounting as an Information System Objective 1: Define accounting and describe its role in making informed decisions, identify business goals and activities, and explain the importance of ethics in accounting. 10. Accounting 20. Business Profitability Liquidity 30. Businesses pursue their goals by engaging in operating, investing, and financing activities.0 a0. Operating activities b0. Investing activities c0. Financing activities 40. Accounting provides important performance measures a. Cash flow (for liquidity) b. Net income or loss (for profitability) c. Ratio of expenses to revenue (for operating activities). 50. Accounting distinctions a. Management accounting b. Financial accounting (1) Financial statements 60. Accounting information is processed by bookkeeping, computers, and management information systems. 0 a0. Bookkeeping b0. Management information system (MIS) 70. Ethical financial reporting 80. Fraudulent financial reporting 90. Sarbanes-Oxley Act 1
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Decision Makers: The Users of Accounting Information Objective 2: Identify the users of accounting information.
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