The following will be discussed in this chapter: Role of accountant, concepts of accounting, financial statements, standards of reporting financial statements, financial ratios, international accounting. | Lecture 28 Chapter 17 Understanding the Principles of Accounting Chapter Outline Role of Accountant Concepts of Accounting Financial Statements Standards of Reporting Financial Statements Financial Ratios International Accounting Accounting Collect, Analyze, & Communicate Financial Information Measures Business Performance Provides Information For Decisions Bookkeeping One Phase of Accounting Records Transactions Accounting Information System Organized Procedure of Measuring, Collecting, Recording and retaining Financial Information Users Of Accounting Managers For goals, plans and budget Employees/Unions compensation Investors/Creditors Growth potential, good credit risk or not Tax Authorities Government Regulatory Agencies Accounting Financial vs. Managerial Financial External Information & Users Managerial Internal Information & Users Accounting Equation Generally Accepted Accounting Principles Assets & Liabilities Owners’ Equity Accountants use equation to balance the data Assets = Liabilities + Equity Accounting Equation Generally Accepted Accounting Principles Assets & Liabilities Assets is any economic resource that is expected to benefit the individual who owns it Liability is the debt that the company owes to the outside party Owners’ Equity Amount of money that the owner would receive if they would sell the business Assets - Liabilities = Equity Accounting Equation Owners’ Equity Amount of money that the owner would receive if they would sell the business OE can be positive or negative Meaningful for both lenders and investors Sources of OE The amount that the owner has invested Profits reinvested Double Entry Accounting Assets - Liabilities = Equity Accounting Equation Double Entry Accounting Every transaction affects two accounts Ensures that the accounting equations always balances Financial Statements Balance Sheet- Statement of Financial Position Income Statement- Statement of Revenue and Expenses Statement of Cash Flows Budget Balance Sheet Assets | Lecture 28 Chapter 17 Understanding the Principles of Accounting Chapter Outline Role of Accountant Concepts of Accounting Financial Statements Standards of Reporting Financial Statements Financial Ratios International Accounting Accounting Collect, Analyze, & Communicate Financial Information Measures Business Performance Provides Information For Decisions Bookkeeping One Phase of Accounting Records Transactions Accounting Information System Organized Procedure of Measuring, Collecting, Recording and retaining Financial Information Users Of Accounting Managers For goals, plans and budget Employees/Unions compensation Investors/Creditors Growth potential, good credit risk or not Tax Authorities Government Regulatory Agencies Accounting Financial vs. Managerial Financial External Information & Users Managerial Internal Information & Users Accounting Equation Generally Accepted Accounting Principles Assets & Liabilities Owners’ Equity Accountants use equation to balance the data Assets
