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Final

Chapter 4- 12 from textbook. for final and midterm.

53 Pages
115 Views

Department
Management (MGT)
Course Code
MGTA02H3
Professor
Chris Bovaird

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CHAPTER 4: UNDERSTANDING ACCOUNTING ISSUES
Accounting:
- system for collecting, analyzing, and communicating financial info
-measure business performance
- translate this info so managers (or others) can make decision
Bookkeeping: recording accounting transactions
Accounting information system (AIS): organized procedure for identifying, measuring,
recording, and retaining financial info so that it can be used in
accounting statements and management reports
Users of accounting information:
- Business managers
- Employees/unions
-Investors/creditors
-taxing authorities
- Government regulatory agencies
Controller: manages all the firms accounting activities
Financial accounting:
-
aimed at external
users about financial condition
-
tends to look at business as a whole
Managerial (mgt) accounting:
-
aimed at internal
www.notesolution.com
users
-
communicates info about performance and problems, for planning, decision-making and
control purposes
-
tends to look at individual
products
Chartered accounting (CA):
-
earned university degree
-
completed educational program and passed a national exam (CICA)
-
half works for the CA firms for the public (typically provide audit, tax & mgt services)
-
half works for government (focuses on external financial reporting, certifying various
interested parties that the financial records of a company
accurately reflect the true financial condition of the firm)
-
2006, 70 000 CAs in Canada
Certified general accountant (CGA):
-
completed educational program and passed a national exam (CGAAC)
-
to be eligible, must have an accounting job with a company
www.notesolution.com
-
formerly, CGAs were not allowed to audit financial statements
-
focuses on external financial reporting & use of computer as mgt acct tool (pensions)
-
most works in privately, few CGA firms, sometimes CA firms
-
2006, 40 000 CGAs in Canada
Certified management accountant (CMA):
-
earned university degree
-
passed a 2-part national examination (SMAC)
-
completed strategic leadership program, while gaining experience
-
help organizations maintain a competitive advantage; internal mgt acct
-
2006, 37 000 CMAs in Canada
Audit: accountant examines a company’s financial records (AIS) to determine if it used
proper procedures to prepare its financial reports
Forensic accountant: tracks down hidden funds in the business firms, usually as part of a
criminal investigation
Generally accepted accounting principle (GAAP): standard rules and methods used by
accountants in preparing financial reports (CICA)
Tax services: helping clients with preparing their tax returns & tax planning
www.notesolution.com

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Description
CHAPTER 4: UNDERSTANDING ACCOUNTING ISSUES Accounting: - system for collecting, analyzing, and communicating financial info -measure business performance - translate this info so managers (or others) can make decision Bookkeeping: recording accounting transactions Accounting information system (AIS): organized procedure for identifying, measuring, recording, and retaining financial info so that it can be used in accounting statements and management reports Users of accounting information: - Business managers - Employees/unions -Investors/creditors -taxing authorities - Government regulatory agencies Controller: manages all the firms accounting activities Financial accounting: - aimed at external users about financial condition - tends to look at business as a whole Managerial (mgt) accounting: - aimed at internal www.notesolution.com users - communicates info about performance and problems, for planning, decision-making and control purposes - tends to look at individual products Chartered accounting (CA): - earned university degree - completed educational program and passed a national exam (CICA) - half works for the CA firms for the public (typically provide audit, tax & mgt services) - half works for government (focuses on external financial reporting, certifying various interested parties that the financial records of a company accurately reflect the true financial condition of the firm) - 2006, 70 000 CAs in Canada Certified general accountant (CGA): - completed educational program and passed a national exam (CGAAC) - to be eligible, must have an accounting job with a company www.notesolution.com - formerly, CGAs were not allowed to audit financial statements - focuses on external financial reporting & use of computer as mgt acct tool (pensions) - most works in privately, few CGA firms, sometimes CA firms - 2006, 40 000 CGAs in Canada Certified management accountant (CMA): - earned university degree - passed a 2-part national examination (SMAC) - completed strategic leadership program, while gaining experience - help organizations maintain a competitive advantage; internal mgt acct - 2006, 37 000 CMAs in Canada Audit: accountant examines a companys financial records (AIS) to determine if it used proper procedures to prepare its financial reports Forensic accountant: tracks down hidden funds in the business firms, usually as part of a criminal investigation Generally accepted accounting principle (GAAP): standard rules and methods used by accountants in preparing financial reports (CICA) Tax services: helping clients with preparing their tax returns & tax planning www.notesolution.com Management consulting services: Specialized accounting services to help managers resolve a variety of problems in finance, production scheduling and etc Private accountant: hired as a salaried employee to deal with a companys day-to-day accounting needs The Accounting Equation: Assets = Liabilities + Owners Equity Asset: anything owned by the firm (land, buildings, equipment, inventory, accounts receivable) Liabilities: debt that the firm owes to others Owners equity: Owners Equity = Assets Liabilities - what would remain if the company were liquidated, all its assets were sold, and all its debts were paid - assets > liabilities, positive - assets < liabilities, negative (assets cannot pay for debt) - consists of 2 sources of capital: 1) the amount that the owners originally invested 2) profits earned by and reinvested in the company Double-entry bookkeeping: - developed in the 15 www.notesolution.com
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