Chapter 1 Uses of Accounting Information and the Financial Statements

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Table of Contents

Financial Accounting

Chapter 1 Uses of Accounting Information and the Financial Statements

LEARNING OBJECTIVES

LEARNING OBJECTIVES (continued)

Accounting as an Information System

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Business Goals, Activities, and Performance Measures

Business Goals

Business Goals and Activities

Business Activities

Business Activities (continued)

Performance Measures

Financial and Management Accounting

Management Accounting

Financial Accounting

Processing Accounting Information

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Discussion

Decision Makers: The Users of Accounting Information

The Users of Accounting Information

Decision Makers

Management

Outside Users with a Direct Financial Interest

People, Organizations, and Agencies with an Indirect Financial Interest

Discussion

Accounting Measurement

Four Basic Questions

What Is Measured?

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Discussion

A.

The Corporation as a Separate Entity

Types of Business Organization

The Corporate Form of Business

Number and Receipts of U.S. Proprietorships, Partnerships, and Corporations, 1994

The Corporate Form of Business

Discussion

Financial Position and the Accounting Equation

Financial Position

Assets

Liabilities

Ownersí Equity

Three Types of Transactions That Affect Retained Earnings

Some Illustrative Transactions

T1. Ownersí Investments

T2. Purchase of Assets with Cash

T3. Purchase of Assets by Incurring a Liability

T4. Payment of a Liability with Cash

T5. Revenues Earned Commission That Was Paid in Cash

T6. Revenues Earned Commission with Deferred Receipt

T7. Collection of Accounts Receivable

T8. Paid Equipment Rental Expense T9. Paid Wages Expense with Cash

T10. Paid Utility Expense Incurring a Current Liability

T11. Paid Dividends with Cash

Discussion

Communication Through Financial Statements

The Importance of Financial Statements

The Income Statement

[Entity] Shannon Realty, Inc. [Title] Income Statement [Period] For the Month Ended December 31, 19xx

The Statement of Retained Earnings

Shannon Realty, Inc. Statement of Retained Earnings For the Month Ended December 31, 19xx

The Balance Sheet

Shannon Realty, Inc. Balance Sheet As of December 31, 19xx

Shannon Realty, Inc. Balance Sheet As of December 31, 19xx

The Statement of Cash Flows

Shannon Realty, Inc. Statement of Cash Flows For the Month Ended December 31, 19xx

Shannon Realty, Inc. Statement of Cash Flows For the Month Ended December 31, 19xx

Shannon Realty, Inc. Statement of Cash Flows For the Month Ended December 31, 19xx

Discussion

Generally Accepted Accounting Principles

Generally Accepted Accounting Principles (GAAP)

Financial Statements, GAAP, and the Independent CPAís Report

Organizations that Influence Current Practice

Discussion

Discussion

Professional Ethics and the Accounting Profession

What Are Professional Ethics?

The Institute of Management Accountants (IMA) Code of Professional Conduct

Discussion

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Author: Needles & Powers