1. ACCOUNTING - PRESENT AND PAST
CHAPTER 1
ACCOUNTING -
PRESENT AND PAST
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2. Learning Objectives What is the FASB?
Who uses accounting information and why?
What is accounting?
What do accountants do?
Where did accounting come from?
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3. Learning Objectives Where did accounting standards come from?
What are the accounting ethical standards?
What is the Conceptual Framework?
Why do businesses report financial information?
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4. Learning Objective 1 What is accounting? McGraw-Hill/Irwin
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5. Accounting is the process of:
Economic information about an entity
For decisions and informed judgments
Identifying
Measuring
Communicating
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6. Who uses accounting information and why?
Learning Objective 2
Who uses accounting information and why?
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7. Users of Accounting Information
Management - planning, directing, controlling
Investors - return
Creditors - probability of collection
Employees - job prospects and retirement benefits
SEC - full disclosure of financial information
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8. Learning Objective 3 What do accountants do? McGraw-Hill/Irwin
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9. Professional Services Provided by Accountants
Financial Accounting
Managerial/Cost Accounting
Auditing - Public Accounting
Internal Auditing
Governmental and Not-for-Profit Accounting
Income Tax Accounting
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10. Where did accounting come from?
Learning Objective 4
Where did accounting come from?
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11. Early History of Accounting
Found accounting records on Mesopotamian clay tablets from 3000 BC
Luca Pacioli published a description of double-entry bookkeeping systems in 1494
Industrial revolution led to non-owner managers who needed to report financial information to owners
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12. Accounting Profession in the United States
The Securities Act of 1933 and the Securities Exchange Act of 1934 gave the SEC the authority to establish accounting principles for SEC firms
The SEC delegated standard setting to other organizations
Committee on Accounting Procedure
Accounting Principles Board
Financial Accounting Standards Board present
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13. Learning Objective 5 What is the FASB? McGraw-Hill/Irwin
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14. Financial Accounting Standards Board
Has issued seven concept statements
Has issued over 140 standards statements
Uses due process is setting standards
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15. Where did accounting standards come from?
Learning Objective 6
Where did accounting standards come from?
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16. Other Accounting Standards
Cost Accounting Standards Board - government contracts, colleges and universities that receive federal research funds
Governmental Accounting Standards Board - state and local governments
International Accounting Standards Committee - seeks comparability of financial statements across nations
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17. What are the accounting ethical standards?
Learning Objective 7
What are the accounting ethical standards?
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18. Ethics in the Accounting Profession
American Institute of Certified Public Accountants
Institute of Management Accountants
Integrity - honest and forthright
Objectivity - impartial and free from conflicts of interest
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19. What is the Conceptual Framework?
Learning Objective 8
What is the Conceptual Framework?
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20. Conceptual Framework
Standards are based on a foundation provided by the Statements of Financial Accounting Concepts:
Objectives of financial reporting
Qualitative characteristics of accounting information
Elements of financial statements
Recognition and measurement in financial statements
Using cash flow information
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21. Why do businesses report financial information?
Learning Objective 9
Why do businesses report financial information?
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22. Concepts Statement No. 1: Objectives of Financial Reporting
Intended for investors and creditors
For assessing the amounts, timing, and uncertainty of prospective cash flows
For providing information about economic resources and claims to those resources
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