MOS 1023 Introduction to Accounting Lecture 1

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Western University
Management and Organizational Studies
Management and Organizational Studies 1023A/B
Maria Ferraro

MOS 1023 Accounting Lecture 1Why Study Accounting make decisions based on accounting information understand impact of actions on bottom line statements are standardizedsame format regardless of organizationUsers and Uses of Accounting not everything in a business is recorded because theyre not economic transactions internal and external users have different needs Users of Financial Information internal users include employeesmanagers impact of pricing strategies on bottom linecompany image Should we target a different market Is segment worthwhile Whats the size of the market can we afford employee salaries benefits what effect would more money into trainingRDadvertising have on overall operationsSecondary users everyone other than investors and creditors In Canada income statement has to follow standards by accounting board which doesnt follow same rule as CRA two sets of income statements are required one that shows slightly higher in expenses for CRA and slighter high in income for shareholders CRA makes changes to expensescustomers want securitywarranty on largeticket items them buy labour unions will use financials to bargain for employee wage rights communities want to know if large local industry is going to closeForms of Business Organization proprietorship is common for small startups or independent contractors even though they may create financial statements for their economic entity they are not legally separate unlimited personal liability profits are reported to CRA as personal income partnership shares a big part of the risk responsibility and skills but is more or less the same as a sole proprietorship limited liability partnerships protects one or more partners when debt hitsonly one has to have full liability corporations GAAP principles apply are more complicated and expensive to set up although easier than it used to be most people think all corporations are public private corporations dont trade their stocks on the Canadian stock exchanges not open for public ownership
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