Detailed Notes

5 Pages
Unlock Document

University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Chapter 14: Understanding Accounting Issues What is a Accounting and Who Uses It accounting: a comprehensive system for collecting, analyzing, and communicating financial information bookkeeping: recording accounting transactions (just one phase of accounting) by sorting, analyzing, and recording thousands of transactions, accountants can determine how well a business is being managed and how financially strong it is (but accounting systems can produce distorted results that cause problems for owners and managers) accounting information system: an organized procedure for identifying measuring, recording, and retaining financial information so that it can be used in accounting statements and management reports (dependable, consistent, mandatory system) users of accounting information: business managers: to set goals , develop plans, set budgets, and evaluate future prospects employees and unions: to get paid and to plan for and receive such benefits as healthcare, insurance, vacation time and retirement pay investors and creditors: to estimate returns to stockholders, to determine a companys growth prospects, and to decide if it is a good credit risk before investing or lending taxing authorities: to plan for tax inflows, to determine the tax liabilities of individuals and businesses, and to ensure that correct amounts are paid in a timely fashion government regulatory agencies: to fulfill their duties: the provincial securities commissions, for example, require firms to file financial disclosures so that potential investors hae valid information about a companys financial status Who are Accountants and What Do They Do the individual who manages all the firms accounting activities (head of AIS) < ensures that reports and statements needed for planning, controlling, and decision making activities are provided financial accounting system: the process whereby interested groups are kept informed about the financial condition of a firm (concerned with external users of info such as consumer groups, unions, govt) < prepares and publishes income statements and balance sheets at regular intervals < looks at company as a whole managerial accounting: internal procedures that alert managers to problems and aid them in planning and decision making (serves internal users, such as different departments) < ex. managers to monitor current projects and plan for future activities < ex. engineers may look at costs of materials or production to make operations improvement < internal reports are forward looking in nature, not historical Professional Accountants chartered accountant (CA): an individual who has met certain experience and education requirements and has passed a licensing examination; acts as an outside accountant for other firms (granted by The Canadian Institute of Chartered Accountants to people who have a university degree, competed an educational program and passed the national exam) < half CA are public, half are government or industry workers < CA focus on external financial reporting certified general accountant (CGA): an individual who has completed an education program and passed a national exam; works in a private industry or a CGA firm (formerly not allowed to audit financial statements of publicly held companies, but this is changing in most provinces) < some work in private CGA firms, CA firms < focus on external financial reporting and use computer as management accounting tool certified management accountant (CMA): an individual who has completed a university degree, passed a national examination, and completed a strategic leadership program; works in industry and focuses on internal management accounting (work in organizations of all sizes) < CMAs bring a strong market focus to strategic management and resource deployment Accounting Services auditing: an accountants examination of a companys financial records to determine if it used proper procedures to prepare its financial reports (companies must provide audited financial reports for loans or when selling stock) < audit determines if the firm has control over fraud and errors from going undetected < examine receipts < may even physically check inventories, equipment, other assets forensic accountants: an accountant who tracks down hidden funds in business firms, usually as part of criminal investigation ( used to examine Swiss bank accounts for assets deposited by victims of Nazi persecution during WWII) generally accepted accounting principles: standard rules and methods used by accountants in preparing financial reports (auditors responsibility to ensure that clients accounting system adheres to these principles tax services: help clients with tax returns, tax planning (tax laws are complex so CA can help a business structure its operations and investments and save millions of dollars in taxes) < accountants must be aware of changing tax laws management consulting services: specialized accounting services to help managers resolve a variety of problems in finance, production scheduling, and other areas (may assist in executive recruitment, plant layout and design, etc private accountant: an accountant hired as a salaried employee to deal with a companys day-to-day accounting needs (to ensure fairness CAs and CGAs must be independent of the firms they audit)
More Less

Related notes for MGTA02H3

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.