Chapter 1 - Introduction to accounting, financial statements introduced. Accounting is often called the language of business because it uses a unique vocabulary to communicate information to decision makers. In this chapter, we will discuss what financial accounting is and briefly introduce how financial information is communicated through financial statements. Then we will study how financial transactions are analyzed and reported on financial statements. | CHUCK KONKOL Office: LUB N 328 Office hours: M,W 3:30 - 5:30 T/As: Rachel, Scott, Tim, Mark See syllabus/web site for other details. Introduction to Financial Accounting BUS ADM-201 1 INTRODUCTION TEXTBOOK: Financial Accounting – Tools for Business Decision Making 1 Seventh Edition Sixth Edition Fifth Edition 2 DEFINITION OF ACCOUNTING Accounting is a process used to record economic (business) activities of an organization in order to generate reports for use by decision makers. 3 4 - System to accomplish a specific task - Method provides uniform results - Goal is to assemble, aggregate, organize and analyze huge volumes of data Related disciplines: -Information Technology (IT) - Industrial Engineering - Corporate/securities Law - Actuarial Science Process 5 Process - Objective. Many rules. US rules are created by the Financial Accounting Standards Board (FASB). US rules are called GAAP. (Generally Accepted Accounting Principles) Companies whose stock is publically traded also must follow laws enforced by a US agency named the Securities and Exchange Commission (SEC). Note: International Financial Reporting Standards (IFRS) and GAAP are close but not exactly the same (yet). 1- Financing Activities Borrowing creates liabilities (debts) owed to creditors. Notes or Bonds payable (Another liability created in operating businesses is accounts payable.) Issuing or Selling stock creates stockholders’ equity Dividends are distributions of profit to owners of stock. 6 Business Activities 3 types 2 - Investing Activities Note: There are other types of assets needed in operating the business (see next slide) Cash Inventory Supplies not used up Accounts receivable Prepaid Insurance 7 Business Activities 3 types Obtaining resources or assets needed to run the business Buildings Equipment, etc Day to day running the business 8 3 - Operating Activities Revenues are the increases in assets resulting from the sale of a product or service Expenses are the cost of . | CHUCK KONKOL Office: LUB N 328 Office hours: M,W 3:30 - 5:30 T/As: Rachel, Scott, Tim, Mark See syllabus/web site for other details. Introduction to Financial Accounting BUS ADM-201 1 INTRODUCTION TEXTBOOK: Financial Accounting – Tools for Business Decision Making 1 Seventh Edition Sixth Edition Fifth Edition 2 DEFINITION OF ACCOUNTING Accounting is a process used to record economic (business) activities of an organization in order to generate reports for use by decision makers. 3 4 - System to accomplish a specific task - Method provides uniform results - Goal is to assemble, aggregate, organize and analyze huge volumes of data Related disciplines: -Information Technology (IT) - Industrial Engineering - Corporate/securities Law - Actuarial Science Process 5 Process - Objective. Many rules. US rules are created by the Financial Accounting Standards Board (FASB). US rules are called GAAP. (Generally Accepted Accounting Principles) Companies whose stock is publically .
