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MOS 1023B (7)
Lecture

MOS1023- Lecture 1.docx

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Department
business management
Course
MOS 1023B
Professor
Jeffery Jutai
Semester
Fall

Description
Lecture #1, January 15, 2014 Introduction: Accounting Why StudyAccounting? • Language of business • Global economic systems depend on reliable and accurate financial reporting 1. Measures business activities 2. Process data into reports (financial statements) 3. Communicates results to decision makers Accounting: Identifies and records the economic events of an organization and communicates to interested users: • INTERNALUSERS o Managers plan, organize, and run a business o Pricing, strategies, marketing, employee compensation, capital budgeting, resource allocation • EXTERNALUSERS o Investors, Creditors  primary users o Others include: tax authorities, regulatory agencies, customers, labor unions, economic planners, communities Ethical Behaviour: • Accountants must have high ethical standards o Actions are legal and responsible o Consider organization’s interests • There are normally rules or codes of conduct to guide ethical behaviour • Companies tend to have rules of conduct Forms of Business Organizations: • PROPRIETORSHIP o Owned by one person o Simple to set up o Owner has control over business o Unlimited liability • PARTNERSHIP o Owned by one than one person o Formalized in a written agreement o Each partner has unlimited liability  Unlimited Liability: if the business incurs debt, and cannot be paid, the bankers will go after personal assets • CORPORATION o Separate legal entity owned by shareholders (owners of shares) o Indefinite life o Owners have limited liability  Limited Liability: If someone buys shares, they are an owner and the bank will not come after personal assets o Either public or private (depends on whether shares are publicly traded Types of Businessses: Manufacturing Business: • Physically makes the product out of the raw material and processes it to make a finished good Merchandising Business: • Product that is already made/manufactured to turn it around and sell it to the customer • Alot of investments for customer service Service Business: • Offers entertainment, transportation, hospitality, financial advice, telecommunication • Have very little inventory, do not have to invest in factory equipment Types of Business Activities: • FINANCING o Obtaining/repaying funds to finance the operations of the business  Borrowing money OR repaying loans/debt  Selling OR repurchasing shares (equity) • INVESTING o Obtaining the resources or assets needed to operate the business for the long term  Purchase/sale of investments  Purchase/sale of long-lived assets such as property, plant and equipment and intangible assets • OPERATING o Operating activities are the main day-to-day activities of the business  Revenues, expenses, related accounts Financial Statements: • The business documen
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