whbm01
TRANSCRIPT
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The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Financial & ManagerialAccounting
The Basis for Business Decisions
TWELFTH EDITION
Williams Haka Bettner Meigs
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ACCOUNTING:Information for Decision Making
Chapter
1
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Accounting
information
The
accounting
process
Decision
makers
Economic
activities
Actions
(decisions)
Accounting
links decision
makers witheconomic
activities and
with the results of
their decisions.
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Types of Accounting Information
Financial
Managerial
Tax
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Information
Users
Investors
Creditors
Managers
Owners
Customers
Employees
Regulatory
agencies-SEC
-IRS
-EPA
Decision Support
CVP analysis
Performance
evaluation
Incremental
analysis
Budgeting
Capital
allocation
Earnings pershare
Ratio analysis
Information System
Cost & Revenue
Determination
Job costing
Process costing
ABC
Sales
Assets &
Liabilities
Plant and
equipment
Loans & equity
Receivables,
payables & cash
Cash Flows
From operations
From financingFrom investing
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Basic Functions of an AccountingSystem
Interpretand record
business
transactions.
Payment
Car
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Basic Functions of an AccountingSystem
Summarizeand
communicate
information to
decisionmakers.
Classify
similar
transactions
into usefulreports.
Interpretand record
business
transactions.
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Objectives of External FinancialReporting
Cash Flow Prospects
Investors Creditors
Return on
Investment
Periodic
dividends
Periodic
interest
Return of
Investment
Sale of
ownership at a
future date
Repayment of
loan at a
future date
The primary external users of financial information are
investorsand creditors.
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Information about economic
resources, claims to resources, and
changes in resources and claims.
Information useful in assessingamount, timing and uncertainty of
future cash flows.
Information useful in making
investment and credit decisions.
(Specific)
(General)
Objectives
ofFinancial
Reporting
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Objectives of External FinancialReporting
The primaryfinancial
statements.
Income Statement
Balance Sheet
Statement of Cash Flows
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Financial
Statements
Financial Statements:
A Lens to View Business
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Characteristics of ExternallyReported Information
A Means to
an End
Broader than
Financial
Statements
Historical in
Nature
Results from Inexact and
Approximate Measures
Based on
General PurposeAssumption
Usefulness
Enhanced via
Explanation
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Internal Users of AccountingInformation
Board of Directors
Chief Executive Officer
Chief Financial Officer
Vice Presidents
Business Unit Managers
Plant Managers
Store Managers Line Supervisors
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Typical Simple Organization Chart
Plant
Accountant
PlantManager
Plant
Accountant
PlantManager
Business UnitManager
V.P. HumanResources
V.P. InformationServices
Chief FinancialOfficer (CFO)
Chief ExecutiveOfficer
(CEO)
Board ofDirectors(Owners)
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Information about decision-making
authority, for decision-making support, and
for evaluating and rewarding decision-makingperformance.
Information useful in assessing
both the past performance and futuredirections of the enterprise and information
from external and internal sources.
Information useful to help the enterprise
achieve its goal, objectives and mission.
Objectives
ofManagerial
Reporting
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Characteristics of ManagementAccounting Information
Timeliness
Identify
Decision-
MakingAuthority
OrientedToward
Future
Measures ofEfficiency and
Effectiveness
A Means to
an End
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Integrity of Accounting Information
Institutional Features
Generally Accepted Accounting Principles (GAAP)
Financial Accounting Standards Board
Securities and Exchange Commission
Internal Control Structure
Audits
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Integrity of Accounting Information
Professional Organizations
American Institute of Certified Public Accountants
Institute of Management Accountants
Institute of Internal Auditors
American Accounting Association
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Integrity of Accounting Information
Competence, Judgment and Ethical Behavior
Certified Public Accountants (CPAs)
Certificate in Management Accounting (CMA)
Certificate in Internal Auditing (CIA)
Code of Professional Conduct
CP
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End of Chapter 1
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