Acc202 Chap001.Ppt [Compatibility Mode]

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

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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

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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.

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.

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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

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.


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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

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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

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Acc202 Chap001.Ppt [Compatibility Mode]