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TEXT BOOK NOTES - CACC 100 CH01 Accounting Matters •...

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Unformatted text preview: CACC 100 CH01 Accounting Matters • Essential to sound business and investing decision • Language of business • Effects price’s of a company’s stocks Ethics in Accounting • The standards of conduct by which one’s actions are judged as right or wrong, honest or dishonest, fair or not • Consider Ethics in the following content: Ethical behavior to financial reporting Ethics questions and issues in actual business situation Use the following steps to analyze ethical dilemmas 1. Recognize an ethical situation and the ethical issues involved Use your personal ethics or an organization’s code of ethics to identify ethical situations and issues 2. Identify and analyze the main elements in the situation Identify the stakeholders . Ask the question: What are the responsibilities and obligations of the parties involved? Stake holders – persons/groups who may be harmed/benefited 3. Identify the alternatives, and weigh the impact of each alternative on various stakeholders Consider all the possible solution Evaluate each alternative Consider all the consequences Select the most ethical alternative Uses and Users of Accounting Accounting is the information system that identifies and records the economic events of an organization, and then communicates them to interested users. • 3 Types/Forms of Organizations: 1. Proprietorships – A business owned by an individual – Simple to set up – The individual has full control over the business – You are personally liable for all debt of the business – Pay personal income tax on their respective share of profits – Examples: restaurants, hair salon, and service stations 2. Partnerships – A business owned by more than 1 person – The company is personally liable for all debt of the business – Pay personal income tax on their respective share of profits – Reasons to form a partnership business: o An individual does not have enough economic resources to initiate or expand the business o Partners bring unique skills or resources to the partnership – Examples: Retail / service-type business including professional practices 3. Corporations – A business organized as a separate legal entity owned by shareholders – Investors receives shares/stocks to indicate ownership – Shareholders(owner’s) are not liable for debts of the business – Pay income taxes as separate legal entities on any corporation profits CACC 100 CH01 – Names of corporations end with Limited(Ltd.), Incorporated(Inc.), or Corporation(Corp.) • 2 Types of Users and How they make use of Accounting Information: 1. Internal users – Managers who plan, organize and run the business – Ex: marketing manager, production supervisor, finance director, company officer – They are always concerned with the following: o Is there enough cash to pay the bills o Can we afford to give employees raises this year o What is the cost of manufacturing each unit of product...
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TEXT BOOK NOTES - CACC 100 CH01 Accounting Matters •...

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