In this chapter students will be able to: Identify the use and users of accounting and the objective of financial reporting, compare different forms of business organizations and explain how Canadian accounting standards apply to these organizations, describe the components of the financial statements and explain the accounting equation. | CHAPTER 1: Accounting in Action Identify the use and users of accounting and the objective of financial reporting. Compare different forms of business organizations and explain how Canadian accounting standards apply to these organizations. Describe the components of the financial statements and explain the accounting equation. Determine what events are recognized in the financial statements and how the events are measured. Analyze the effects of business transactions on the accounting equation. Prepare financial statements. Copyright John Wiley & Sons Canada, Ltd. 2 2 Why is Accounting Important? The information system that identifies, records and communicates economic events to users Important to the world economy Helpful for all business endeavours Solid foundation for other business disciplines Relevant and useful in other disciplines Copyright John Wiley & Sons Canada, Ltd. 3 Using Accounting Information Internal Users Used for planning, organizing and running companies Includes finance, marketing, human resources, production, company officers External Users Investors, creditors, labour unions, customers, regulators and other authorities Used for decisions of ownership, credit, lending, assess compliance, performance Copyright John Wiley & Sons Canada, Ltd. 4 Objective of Financial Reporting Accounting information is communicated to external users via financial statements. The main objective of financial statements is to provide useful information to investors and creditors (external users) to make decisions about a business. Copyright John Wiley & Sons Canada, Ltd. 5 Accounting & Ethics To Solve Ethical Dilemmas Recognize situation and ethical issues involved Identify and analyse elements Identify alternatives and weigh effects on stakeholders Select the most ethical alternative For information to have value, must be prepared by individuals with high standards of ethical behaviour Ethics Standards of conduct used to judge actions Copyright John Wiley & Sons | CHAPTER 1: Accounting in Action Identify the use and users of accounting and the objective of financial reporting. Compare different forms of business organizations and explain how Canadian accounting standards apply to these organizations. Describe the components of the financial statements and explain the accounting equation. Determine what events are recognized in the financial statements and how the events are measured. Analyze the effects of business transactions on the accounting equation. Prepare financial statements. Copyright John Wiley & Sons Canada, Ltd. 2 2 Why is Accounting Important? The information system that identifies, records and communicates economic events to users Important to the world economy Helpful for all business endeavours Solid foundation for other business disciplines Relevant and useful in other disciplines Copyright John Wiley & Sons Canada, Ltd. 3 Using Accounting Information Internal Users Used for planning, organizing and running companies Includes
