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Session 10- Accounting.docx

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Session 10 AccountingAccounting Process of measuring interpreting and communicating financial info to support internal and external business decisionmakingUSERS OF ACCOUNTING INFORMATIONOPEN BOOK MANAGEMENTOpenbook management is sharing sensitive financial information with employees and teaching them how to understand and use financial statements Viewing financial information may help them better understand how their work contributes to the companys success Outsiders use financial data to evaluate investment opportunities ACCOUNTING PROFESSIONALSPublic Accountant An accountant who provides accounting services to other organizationsoMakes sure that the external accounts are valid via auditingoCA chartered accountant CGA and CPA certified pro Accountants not currently in Canada but internationalCAs will become CPAsCMAs certified management accountant arent allowed to auditManagement Accountants Provide timely relevant accurate and concise information that executives can use to operate their firms profitably and effectivelyCMAsFOUNDATION OF THE ACCOUNTING SYSTEMGenerally accepted accounting principles GAAPoPrinciples that outline the conventions rules and procedures for deciding on the acceptable accounting practicesoMuch broader than IFRS international financial reporting standardsAccounting Standards Board AcSBoThe organization that interprets and modifies GAAP in Canada for private and not for profit businessesCanadian public companies are required to use International Financial Reporting Standards IFRS These standards allow for financial statements to be more easily compared from country to countryInvestors WANT these standardsSenior execs must personally certify that the financial info reported by the company is correctCorruption of foreign Public Officials Act a federal law that prohibits Canadian citizens and companies from bribing foreign officials to win or continue businessStatements must be signed by a certified accountant to confirm that the statement is trueBUSINESS ACTIVITIES INVOLVING ACCOUNTINGFinancing activities provide necessary fund to start a business and expand it after it begins operatingInvesting activities provide valuable assets required to run a businessOperating activities focus on selling goods and services but they also consider expenses as important elements of sound financial managementPROCESS OF ACCOUNTING CYCLETransaction identification select economic events basic data receiving invoicesRecording record classify and summarize processing Communication prepare accounting reports and analyzeinterpret for users balance sheets income statements statement of owners equity statement of cash flowTHE ACCOUNTING CYCLEAccountingcycleThesetofactivitiesinvolvedinconvertinginformationandindividualtransactionsintofinancialstatementsKEY ACCOUNTING CATEGORIES OF FINANCIAL INFORMATIONAsset anything with future benefit owned or controlled by a firm Liability A claim against a firms assets by creditors Owners equity The funds that owners invest in the business plus any
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