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Transcript of Acc202 Chap001.Ppt [Compatibility Mode]
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7/28/2019 Acc202 Chap001.Ppt [Compatibility Mode]
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The Basis for Business DecisionsThe Basis for Business Decisions
Fifteenth Edition
Williams Haka Bettner Carcello
Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
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Accounting:Accounting:
Information for Decision MakingInformation for Decision Making
Chapter 1
Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
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Accounting
The
Accounting
Process
Accounting links
decision makers
with economic
1-3
Information
Decision
Makers
Activities
Actions
(decisions)
ac v es anwith the results of
their decisions.
Reported
Results of
Actions
(decisions)
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Types of Accounting InformationTypes of Accounting Information
Financial Tax
1-4
Management
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Accounting SystemsAccounting Systems
An accounting system consists of thepersonnel, procedures, technology, and
records used by an organization to
develop accounting information and to
1-5
decision makers.
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Information
Users
Investors
Decisions
Supported
Performance
Information System
Financial
Information
Provided
1-6
Managers
Owners
Customers
Employees
Regulators
-SEC-IRS
-FTC
Stock
investments
Tax strategies
Labor relations
Resource
allocationsLending
decisions
Borrowing
ProfitabilityFinancial
position
Cash flows
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Determining Information NeedsDetermining Information Needs
1-7
Although much accounting information
clearly is essential to business operations,
management still has many choices as tothe types and amount of accounting
information to be developed.
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Basic Functions of an AccountingBasic Functions of an Accounting
SystemSystem Classify
similar
transactions
into useful
Interpretand record
business
transactions.
1-8
Summarize
and
communicate
information to
decision
makers.
repor s.
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Components of Internal ControlComponents of Internal Control
ControlEnvironment
Risk
Assessment
1-9
Control
Activities
Information and
Communication
Monitoring
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External Users of AccountingExternal Users of Accounting
InformationInformation
Owners
Creditors
Potential investors
Labor unions
1-10
Governmental agencies
Suppliers
Customers
Trade associations
General public
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Provide specific information about
economic resources, claims to resources,
and changes in resources and claims.
Objectives of External FinancialObjectives of External Financial
ReportingReporting
1-11
Provide information useful in assessing
amount, timing and uncertainty of future
cash flows.
Provide general information useful in
making investment and credit decisions.
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Objectives of External FinancialObjectives of External Financial
ReportingReporting
The primary financial
statements.
1-12
a anceSheet
Statementof Cash
Flows
ncomeStatement
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Characteristics of ExternallyCharacteristics of Externally
Reported InformationReported InformationA Means to an
End
Broader than
Financial
Statements
Usefulness
Enhanced via
Explanation
1-13
Historical in
Nature
Results from Inexact and
Approximate Measures
Based on General-
Purpose
Assumption
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Users of Internal AccountingUsers of Internal Accounting
InformationInformation Board of directors
Chief executive officer (CEO)
Chief financial officer (CFO)
Vice presidents
1-14
Business unit managers
Plant managers
Store managers
Line supervisors
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Typical
Simple
OrganizationChart
Chief Executive
Officer
(CEO)
Board of
Directors
Owners
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Plant
Accountants
Plant
Managers
Plant
Accountants
Plant
Managers
BusinessUnit
Managers
V.P.Human
Resources
V.P.Information
Services
ChiefFinancial
Officer (CFO)
V.P
Ethics
Controller Treasurer
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Objectives of ManagementObjectives of Management
Accounting InformationAccounting Information
To help achieve
goals and
missions
1-16
To help evaluate
and reward
decision makers
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Characteristics of ManagementCharacteristics of Management
Accounting InformationAccounting Information
Timeliness
Identify
Decision MakerA Means to an
End
1-17
Oriented Toward
Future
Measures of
Efficiency and
Effectiveness
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Institutional FeaturesInstitutional Features
Generally Accepted Accounting Principles (GAAP)
Financial Accounting Standards Board
International Accounting Standards Board
1-18
Public Company Accounting Oversight Board
Audits of Financial Statements
Legislation
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Professional OrganizationsProfessional Organizations
American Institute of Certified Public Accountants
Institute of Management Accountants
Institute of Internal Auditors
1-19
Committee of Sponsoring Organizations of the
Treadway Commission (COSO)
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Competence, Judgment andCompetence, Judgment and
Ethical BehaviorEthical Behavior
Certified Public Accountant (CPA)
Certified Management Accountant (CMA)
Certified Internal Auditor CIA
1-20
Ethical behavior is the
cornerstone of the
accountingprofession.
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Careers in AccountingCareers in Accounting
Public Accounting
Management Accounting
Governmental Accounting
Accountin Education
1-21
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What About Bookkeeping?What About Bookkeeping?
Bookkeeping is the clerical side of accountingthe recording of routine transactions and day-to-
day record keeping.
1-22
Professional accountants are involved more with
the interpretation and use of accounting
information than with its actual preparation.
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Im Not An Accounting MajorIm Not An Accounting Major
Accounting is the language of business,and trying to run a business without
understanding accounting information is
analogous to trying to play sports without
1-23
.
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Ethics, Fraud & CorporateEthics, Fraud & Corporate
GovernanceGovernance
Corporate governance entails corporate
structures and processes for overseeing
the companys affairs to ensure that the
1-24
interests of shareholders in mind.
Dennis Kozlowski, the former CEO
of Tyco, was sentenced to 8 1/3 to
25 years in prison for hisconviction for conspiracy,
securities fraud, and falsifying
records.
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End of Chapter 1End of Chapter 1
McGraw-Hill/Irwin1-25