Chapter 1 Notes.docx - Financial Accounting What is...

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Financial AccountingWhat is Accounting?Accounting: the language of business Financial Statements-used by 1.Investors2.Creditors3.RegulatorsFinancial Managers-Use accounting data to use and manage their business. Follow the Accounting processKnown as the Language of BusinessCategories of AccountingFinancial accounting is externally oriented. primary users:1.Investors-What will be our gain?2.Creditors-Can the company repay its debts? Accounting is made up of two broad categories. 1.Financial 2.Managerial Financial Accounting Purposes1.Measure business activities 2.communicate with external parties. In order to make informed decisionsManagerial accounting: is internally oriented, aims to inform people with inside the company or the firm’s own managers.The Rules and Regulations of Accounting The Securities and Exchange Commission or SEC The Securities Act of 1933 the Securities and Exchange Act of 1934
Authority to have require publicly traded companies to prepare periodic financial statements

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