ACC 101 Chapter 1

Topics: Decision making, Financial statements, Economics Pages: 16 (421 words) Published: April 5, 2015
Accounting
Information for Decision Making
Chapter 1

PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA
Charles W. Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA
Cynthia J. Rooney, Ph.D., CPA
McGraw-Hill/Irwin

Copyright © 2012 The McGraw-Hill Companies,

The
Accounting
Process

Economic
Activities

Actions
(decisions)

Accounting links
decision makers
with economic
activities  and
with the results of
their decisions.

Decision
Makers

Accounting
Information

Reported
Results of
Actions
(decisions)
1-2

Types of Accounting
Information
Financial

Tax

Management

1-3

Accounting Systems
An accounting system consists of the
personnel, procedures, technology, and
records used by an organization to
develop accounting information and to
communicate this information to decision
makers.

1-4

Basic Functions of an
Accounting System

 Interpret
and record
business
transactions.

 Classify
similar
transactions
into useful
reports.

 Summarize
and
communicate
information to
decision
makers.
1-5

Components of Internal
Control
Control
Environment

Risk
Assessment
Control
Activities
Information and
Communication
Monitoring
1-6

External Users of
Accounting Information
•Owners
•Creditors
•Potential investors
•Labor unions
•Governmental agencies
•Suppliers
•Customers
•Trade associations
•General public

1-7

Objectives of External
Financial Reporting
Provide specific information about
economic resources, claims to resources,
and changes in resources and claims.

Provide information useful in assessing
amount, timing and uncertainty of future
cash flows.

Provide general information useful in
making investment and credit decisions.
1-8

Objectives of External
Financial Reporting
The primary financial
statements.
Balance
Sheet

Income
Statement
Statement
of Cash
Flows
1-9

Characteristics of
Externally Reported
AAMeans
Meansto
toan
an
Information End
End
Usefulness
Usefulness
Enhanced
Enhancedvia
via
Explanation
Explanation

Broader
Broaderthan
than
Financial
Financial
Statements
Statements

Based
Basedon
onGeneralGeneralPurpose
Purpose
Assumption
Assumption

Historical
Historicalin
in
Nature
Nature

Results
Resultsfrom
fromInexact
Inexactand
and
Approximate
ApproximateMeasures
Measures
1-10

Users of Internal
Accounting Information
Board of directors
Chief executive officer (CEO)
Chief financial officer (CFO)
Vice presidents
Business unit managers
Plant managers
Store managers
Line supervisors

1-11

Objectives of
Management Accounting
Information
To
Tohelp
helpachieve
achieve
goals
goalsand
and
missions
missions
To
Tohelp
helpevaluate
evaluate
and
andreward
reward
decision
decisionmakers
makers

1-12

Characteristics of
Management Accounting
InformationTimeliness
Timeliness
AAMeans
Meansto
toan
an
End
End

Measures
Measuresof
of
Efficiency
Efficiencyand
and
Effectiveness
Effectiveness

Identify
Identify
Decision
DecisionMaker
Maker

Oriented
OrientedToward
Toward
Future
Future

1-13

Competence, Judgment
and Ethical Behavior
Certified Public Accountant (CPA)
Certified Management Accountant (CMA)
Certified Internal Auditor (CIA)

Ethical behavior is the
cornerstone of the
accounting
profession.
1-14

Careers in Accounting
Public Accounting
Management Accounting
Governmental Accounting
Accounting Education

1-15

End of Chapter 1

McGraw-Hill/Irwin

1-16

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