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Financial Accounting

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Accounting 'links' decision makers with economic activities and with the ... American Institute of Certified Public Accountants. Institute of Management Accountants ... – PowerPoint PPT presentation

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Title: Financial Accounting


1
Financial Accounting
THIRTEENTH EDITION

Williams Haka Bettner Carcello
2
Chapter1
AccountingInformation for Decision Making
3
Learning Objective
To discuss accounting as the language of business
and the role of accounting information in making
economic decisions.
LO1
4
The accounting process
Accounting links decision makers with economic
activities ¾ and with the results of their
decisions.
Accounting information
Economic activities
Actions (decisions)
Decision makers
5
Types of Accounting Information
Financial
Tax
Managerial
6
Learning Objective
To discuss the significance of accounting systems
in generating reliable accounting information,
and understand the five components of internal
control per COSOs Internal ControlIntegrated
Framework.
LO2
7
Accounting Systems
An accounting system consists of the personnel,
procedures, technology, and records used by an
organization to develop accounting information
and to communicate this information to decision
makers.
8
Information System
  • Information Users
  • Investors
  • Creditors
  • Managers
  • Owners
  • Customers
  • Employees
  • Regulators -SEC
  • -IRS
  • -FTC
  • Decisions Supported
  • Performance evaluations
  • Stock investments
  • Tax strategies
  • Labor relations
  • Resource allocations
  • Lending decisions
  • Borrowing
  • Financial Information Provided
  • Profitability
  • Financial position
  • Cash flows

9
Basic Functions of an Accounting System
  • Interpret and record business transactions.

10
Components of Internal Control
Control Environment
Risk Assessment
Control Activities
Information and Communication
Monitoring
11
Learning Objective
To explain the importance of financial accounting
information for external partiesprimarily
investors and creditorsin terms of the
objectives and the characteristics of that
information.
LO3
12
External Users of Accounting Information
  • Owners
  • Creditors
  • Potential investors
  • Labor unions
  • Governmental agencies
  • Suppliers
  • Customers
  • Trade associations
  • General public

13
Objectives of External Financial Reporting
14
Objectives of External Financial Reporting
  • The primary financial statements.

15
Characteristics of Externally Reported Information
A Means to an End
Broader than Financial Statements
Usefulness Enhanced via Explanation
Based on General-Purpose Assumption
Historical in Nature
Results from Inexact and Approximate Measures
16
Learning Objective
To explain the importance of financial accounting
information for internal partiesprimarily
managementin terms of the objectives and the
characteristics of that information.
LO4
17
Users of Internal Accounting Information
  • Board of directors
  • Chief executive officer (CEO)
  • Chief financial officer (CFO)
  • Vice presidents
  • Business unit managers
  • Plant managers
  • Store managers
  • Line supervisors

18
(No Transcript)
19
Objectives of Management Accounting Information
To help achieve goals and missions
To help evaluate and reward decision makers
20
Characteristics of Management Accounting
Information
Timeliness
Identify Decision Maker
A Means to an End
Oriented Toward Future
Measures of Efficiency and Effectiveness
21
Learning Objective
To discuss elements of the system of external and
internal financial reporting that create
integrity in the reported information.
LO5
22
Integrity of Accounting Information
  • Institutional Features
  • Generally Accepted Accounting Principles (GAAP)
  • Financial Accounting Standards Board
  • International Accounting Standards Board
  • Securities and Exchange Commission
  • Public Company Accounting Oversight Board
  • Audits of Financial Statements
  • Legislation

23
Learning Objective
To identify and discuss several professional
organizations that play important roles in
preparing and communicating accounting
information.
LO6
24
Integrity of Accounting Information
  • Professional Organizations
  • American Institute of Certified Public
    Accountants
  • Institute of Management Accountants
  • Institute of Internal Auditors
  • American Accounting Association
  • Committee of Sponsoring Organizations of the
    Treadway Commission (COSO)

25
Learning Objective
To discuss the importance of personal competence,
professional judgment, and ethical behavior on
the part of accounting professionals.
LO7
26
Integrity of Accounting Information
  • Competence, Judgment and Ethical Behavior
  • Certified Public Accountants (CPAs)
  • Certificate in Management Accounting (CMA)
  • Certificate in Internal Auditing (CIA)

27
Learning Objective
To discuss various career opportunities in
accounting.
LO8
28
Careers in Accounting
  • Public Accounting
  • Management Accounting
  • Governmental Accounting
  • Accounting Education

29
End of Chapter 1
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