Reading Notes- Ch1 and Ch2.docx

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Department
Business Administration
Course
BUS 251
Professor
Anne Mac Donald
Semester
Summer

Description
Reading Notes Chapter 1AccountingDynamicRequires creativityControversialMore artscienceUncertainimpreciseMany right answersFlexibleRequires judgement3 important components1System for gathering data about an entitys economic activity2Processing and organizing the data to produce useful info about it 3Communicate that info to decisionmakers managersDataInformation differences on TableDataInformationRaw unprocessed facts about an entitys Results from organizing and presenting the econ activity entered in an accounting systemdata Useful for decisionmakers StakeholdersAccounting SystemProcess and Communicate infoGather organize dataDataAccounting matters because it has econ consequencesoAffects wealthoExampleChoosing to pay less tax Resultkeep more govt gets lessoAim to avoid unexpected negative econ consequencesWhy do people need and want infoBetter decisions oOtherwise just a guessoCan impair decisionmaking Need GOOD informationoAmount of info has limitsToo much costly and time consumingCostBenefitBenefitcosttradeoffAccounting EnvironmentFinancial statement reports are influenced by circumstances under which the activity occursoAccounting responds to the environment and people using the info Factors that affect how an entity approached its financial reportingEnvironment1Overall environment Establish structure in societyaPolitical bCulturalcEconomicdCompetitiveeRegulatoryfLegal2EntitiesaCan be public vs Private large vs smallbUnionized vs nonunionizedcDo business in different marketsdAt center of environment iStakeholders ask for infoiiEntities provide
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