Chapter 1 – Part 1 Define accounting vocabulary 1. 2. 3. • Measures business activity • Processes data into reports • Communicates results to decision makers Copyright (c) 2009 Prentice Hall. All rights reserved. 3 End product of accounting process Report on business in monetary terms Copyright (c) 2009 Prentice Hall. All rights reserved. 4 Define the users of financial information Accounting — An Information Process Identification of Users 6 Users of Accounting Information Financial Accounting EXTERNAL USERS • • • • • investors creditors regulators customers competitors Managerial Accounting INTERNAL USERS owners managers employees 7 Accounting — An Information Process Identification of Users User Information Needs 8 Accounting — An Information Process Identification of Users User Information Needs Accounting System 9 Accounting — An Information Process Identification of Users User Information Needs Economic Data and Activities Accounting System 10 Accounting — An Information Process Identification of Users User Information Needs Economic Data and Activities Accounting System Reports 11 Accounting — An Information Process Identification of Users User Information Needs Economic Data and Activities Accounting System Reports User Decisions 12 Individuals Businesses Creditors Investors Taxing Authorities Copyright (c) 2009 Prentice Hall. All rights reserved. 13 Financial Accounting Provides information for external decision makers ◦ Investors ◦ Creditors ◦ Taxing authorities Managerial Accounting Provides information for internal decision makers ◦ Managers ◦ Individual business owners Copyright (c) 2009 Prentice Hall. All rights reserved. 14 Describe the accounting profession and the organizations that govern it Lucrative career with many opportunities Certified Public Accountants (CPAs) ◦ Pass qualifying exam ◦ Meet education and/or experience requirements Public Accounting – CPA Firms Private Accounting – Business & Other Organizations Copyright (c) 2009 Prentice Hall. All rights reserved. 16 Users of Accounting Information Financial Accounting EXTERNAL USERS • • • • • investors creditors regulators customers competitors 17 Generally Accepted Accounting Principles established rules, principles, and concepts Formulated by Financial Accounting Standards Board (FASB) 18 FASB • Financial Accounting Standards Board • Private organization that makes accounting standards Copyright (c) 2009 Prentice Hall. All rights reserved. 19 Identify the different types of business organizations Proprietorships Partnerships Corporations Limited Liability Companies Copyright (c) 2009 Prentice Hall. All rights reserved. 21