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Chapter 1 – Part 1
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Define accounting vocabulary
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1. Measures business activity 2. Processes data into reports 3. Communicates results to decision makers 3Copyright (c) 2009 Prentice Hall. All rights reserved.
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End product of accounting process Report on business in monetary terms 4Copyright (c) 2009 Prentice Hall. All rights reserved.
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Define the users of financial information
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6 Accounting — An Information Process Accounting — An Information Process Identification of Users
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7 EXTERNAL USERS Financial Accounting investors creditors regulators customers competitors owners managers employees INTERNAL USERS Managerial Accounting Users of Accounting Information
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8 User Information Needs Accounting — An Information Process Accounting — An Information Process Identification of Users
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9 Identification of Users User Information Needs Accounting System Accounting — An Information Process Accounting — An Information Process
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10 Identification of Users User Information Needs Accounting System Economic Data and Activities Accounting — An Information Process Accounting — An Information Process
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11 Identification of Users User Information Needs Accounting System Economic Data and Activities Reports Accounting — An Information Process Accounting — An Information Process
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12 Identification of Users User Information Needs Accounting System Reports Economic Data and Activities User Decisions Accounting — An Information Process Accounting — An Information Process
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IndividualsBusinessesInvestors Creditors Taxing Authorities 13Copyright (c) 2009 Prentice Hall. All rights reserved.
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Financial Accounting Provides information for external decision makers ◦ Investors ◦ Creditors ◦ Taxing authorities Managerial Accounting Provides information for internal decision makers ◦ Managers ◦ Individual business owners 14Copyright (c) 2009 Prentice Hall. All rights reserved.
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Describe the accounting profession and the organizations that govern it
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Lucrative career with many opportunities Certified Public Accountants (CPAs) ◦ Pass qualifying exam ◦ Meet education and/or experience requirements 16 Public Accounting – CPA Firms Private Accounting – Business & Other Organizations Copyright (c) 2009 Prentice Hall. All rights reserved.
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17 EXTERNAL USERS Financial Accounting investors creditors regulators customers competitors Users of Accounting Information
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18 Generally Accepted Accounting Principles - established rules, principles, and concepts Formulated by Financial Accounting Standards Board (FASB)
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Financial Accounting Standards Board Private organization that makes accounting standards FASB 19Copyright (c) 2009 Prentice Hall. All rights reserved.
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Identify the different types of business organizations
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ProprietorshipsPartnerships Corporations Limited Liability Companies 21Copyright (c) 2009 Prentice Hall. All rights reserved.
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