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Lecture 16

BUSI 1600U Lecture Notes - Lecture 16: Financial Accounting, Tax Accounting In The United States, Financial Statement


School
UOIT
Department
Business
Course Code
BUSI 1600U
Professor
Malcolm Mac Taggart
Lecture
16

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Understanding accounting and financial
information
Sunday, December 6, 2015
8:41 PM
Importance of nancial information
oYou have to know something about accounting if you want to succeed
in business.
oThe simple truth is that learning some basic accounting terms is
mandatory.
oYou also have to understand the relationship of bookkeeping to
accounting and how accounts are kept.
oIt’s almost impossible to run a business without being able to read,
understand, and analyze accounting reports and nancial statements.
oAccounting is the recording, classifying, summarizing and interpreting
of nancial transactions and events!
oAudiences
Managers
Government
Investors, suppliers, and creditors
Accounting information support decisions
oManagers: Financial reports pinpoint problems/opportunities
oInvestors, Suppliers, and Creditors: provides a means to analyze
business
oGovernment: assists with tax collection
Areas of accounting
oThe accounting profession is divided into ve key working areas:
omanagerial accounting
onancial accounting
ocompliance (auditing)
otax accounting
ogovernmental and not-for-prot accounting
oManagerial Accounting
Inside Organization
C.M.A.
C.G.A.
oFinancial Accounting: Attest Function, Audit, taxes

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C.A.
C.G.A.
C.M.A.
Types of accountants
Public
oAuditing
oTax Consulting and Compliance
oManagement Consulting
Private
oManagement Accounting
oGovernment Accounting
oAcademia
oTax Accounting
Preparing returns
oGovernment & Not-for-prot Accounting
oCompliance
reviewing and evaluating the records
Private and public accountants
oMany organizations employ private accountants, who work for a
single rm, government agency, or non-prot organization.
oHowever, not all organizations want or need a full-time accountant.
oTherefore, they hire independent public accounting rms to maintain
their nancial records.
oAn accountant who provides his or her services to individuals or
businesses on a fee basis is called a public accountant.
oThrough independent rms, public accountants can provide a variety of
services.
oForensic Accounting
oA relatively new area of accounting that focuses its attention on
fraudulent activity.
oLike forensic police o;cers who try to “gure out” a crime scene,
forensic accountants are used to gure out how people stole money
from a company.
Compliance
oThe job of reviewing and evaluating the records used to prepare a
company’s nancial statements is referred to as compliance.
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oThe most important function and income generator for public
accounting rms is performing independent audits (examinations) of
the books and nancial statements of companies.
oAn independent audit is an evaluation and unbiased opinion about
the accuracy of a company’s nancial statements.
Financial accounting
oFinancial accounting di?ers from managerial accounting in that the
information and analyses it generates are for people
outside the
organization.
oThe information goes to owners and prospective owners, creditors and
lenders, employee unions, customers, suppliers, government agencies,
and the general public.
Annual report
oA yearly statement of the nancial condition, progress, and
expectations of an organization.
oVarious quarterly reports (every three months) keep the users more
current.
oThese reports are required by law for the shareholders of all public
corporations.
Accounting designations
oChartered Accountant (CA)
oAn accountant who has met the examination, education, and
experience requirements of the Canadian Institute of Chartered
Accountants (CICA).
oChartered Accountants (CAs) are widely recognized as the leading
nancial and accounting professionals in Canada.
oCertied Management Accountant (CMA)
oAn accountant who has met the examination, education, and
experience requirements of the Society of Management Accountants of
Canada.
oCertied General Accountant (CGA)
oAn accountant who has met the examination, education, and
experience requirements of the Certied General Accountants
Association of Canada.
Non-prot accounting
oNot-for-prot organizations also require accounting professionals.
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