BU227 Chapter 1: Chapter 1 What is FA
Document Summary
Creditors (lenders): lend money for a specific period of time, and gain by charging interest. Investors (owners): shareholders/stakeholders buy % of large corporations, hoping to receive a portion of company"s dividends, and to eventually sell their share for a higher price than they paid. To understand any company"s financial statements, you must understand its operations. Financing activities: exchanging money with lenders and owners. Accounting: a system that collects and processes (analyzes, measures, records) financial information. Investing activities: buying or selling property about an organization and reports that information to decision makers. Managerial accounting: detailed plans & continuous performance reports. Internal decision makers: managers typically must plan daily operations of the organization. Financial accounting: periodic (quarterly/annual) financial statements & related disclosures. External decision makers: parties outside firm; creditors, investors, suppliers, customers. Accounting records: an organized format used to accumulate the dollar effects of transactions.
