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    Chapter 1 (Accounting - What The Numbers Mean 10e)

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    Nguyen Dac Thich
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    Chapter 1 (Accounting - What The Numbers Mean 10e)

    Uploaded by

    Nguyen Dac Thich
    3K views17 pages
    Chapter 1

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    Chapter 1 (Accounting - What the Numbers Mean 10e)

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    Chapter 1

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    3K views17 pages

    Chapter 1 (Accounting - What The Numbers Mean 10e)

    Uploaded by

    Nguyen Dac Thich
    Chapter 1

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 17

    2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

    McGraw-Hill/Irwin Copyright 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
    Chapter 1
    AccountingPresent and Past

    PowerPoint Authors:
    Susan Coomer Galbreath, Ph.D., CPA
    Charles W. Caldwell, D.B.A., CMA
    Jon A. Booker, Ph.D., CPA, CIA
    Cynthia J. Rooney, Ph.D., CPA

    McGraw-Hill/Irwin Copyright 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
    1-3

    LO 1 What is Accounting?

    Accounting is the process of:

    McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.


    1-3
    1-4

    LO 2
    Users and Uses of
    Accounting Information
    Decision/Informed Judgment
    User Made
    Management Planning, directing, and controlling
    Investors/Shareholders Assessing amounts, timing, and
    uncertainty of future cash returns on
    their investment
    Creditors/Suppliers Assessing probability of collection and
    the risk of late (or non-) payment
    Employees Planning for retirement and future job
    prospects
    Securities and Exchange Reviewing for compliance of all
    Commission required information

    McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.


    1-4
    1-5

    LO 3 Financial Accounting

    Financial accounting generally refers to


    the process that results in the preparation
    and reporting of financial statements for
    an entity.

    Financial accounting is primarily


    externally oriented and concerned with
    the historical results of an entitys
    performance.
    McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
    1-5
    1-6

    LO 3
    Managerial Accounting/
    Cost Accounting
    Managerial accounting is concerned with the use
    of economic and financial information to plan
    and control many of the activities of the entity
    and to support the management decision-making
    process.

    Cost accounting relates to the determination


    and accumulation of product, process, or
    service costs.

    McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.


    1-6
    1-7

    LO 3
    AuditingPublic
    Accounting
    Public accounting firms
    and individual Certified
    Public Accountants (CPAs)
    provide auditing services
    and issue an independent
    auditors report.

    An independent auditors report usually contains four brief


    paragraphs and states whether the financial statements are
    prepared in conformity with generally accepted accounting
    principles. An auditors report can be unqualified (a clean
    opinion) or qualified.
    McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
    1-7
    1-8

    LO 3 Internal Auditing
    Internal auditors are
    professional
    accountants who
    perform functions much
    like those of an external
    auditor. However,
    internal auditors are
    employed in industry
    rather than public
    accounting.

    McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.


    1-8
    1-9

    LO 3
    Governmental and Not-for-
    Profit Accounting
    Governmental units (e.g.,
    municipal, state, and
    federal agencies) and not-
    for-profit entities (e.g.,
    universities, hospitals, and
    religious organizations)
    require the same
    accounting functions to be
    performed as do other
    accounting entities.

    McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.


    1-9
    1-10

    LO 3 Income Tax Accounting

    Tax practitioners often


    develop specialties in
    the taxation of
    individuals,
    partnerships,
    corporations, trusts
    and estates, or
    international tax law
    issues.

    McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.


    1-10
    1-11

    LO 6
    How Has Accounting
    Developed?
    Effective July, 2009, all FASB standards were
    superseded by the FASB Accounting Standards
    Codification (FASB Codification). Essentially, the FASB
    Codification reorganized divergent sources of U.S.
    GAAP in a more accessible and researchable format.
    The FASB Codification now represents a single source
    of U.S. GAAP.

    McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.


    1-11
    1-12

    LO 6
    Standards for Other Types
    of Accounting
    Cost Accounting
    Managerial/Cost
    Standards Board (CASB)
    Accounting
    for government contracts

    Auditing/Public Auditing Standards


    Accounting Board (part of AICPA)

    Governmental
    State and Local
    Accounting Standards
    Governments
    Board (GASB)

    McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.


    1-12
    1-13

    LO 6
    International Accounting
    Standards
    The goal of the International Accounting
    Standards Board (IASB) is to develop a single
    set of high-quality, understandable, enforceable
    and globally accepted financial reporting
    standards based upon clearly articulated
    principles.

    The IASB has


    issued 41 IASs and
    13 IFRSs.
    McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
    1-13
    1-14

    LO 7
    Ethics and the Accounting
    Profession
    Integrity Objectivity

    Independence Competence

    McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.


    1-14
    1-15

    LO 8
    The Conceptual
    Framework
    In the mid-1970s, the Financial Accounting Standards
    Board (FASB) began creating the Statements of
    Financial Accounting Concepts (SFAC) in an effort to
    define the underlying concepts of accounting principles
    and financial reporting practices.

    Statements of Financial
    Accounting Concepts (SFACs)
    describe concepts and
    relationships that underlie financial
    accounting standards.
    McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
    1-15
    1-16

    LO 9
    Concepts Statement No. 8
    Chapter 1: The Objective of General
    Purpose Financial Statements

    Individual firms or
    External Users Historical cost
    entities

    Benefits exceed Notes and


    Timely information
    costs disclosures

    Does not measure


    Accrual accounting Evolving
    value of the firm
    McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
    1-16
    1-17

    End of Chapter 1

    McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.


    1-17

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