COMM 111 Chapter Notes - Chapter 1: Net Income, Book Value, Accounting Equation
Document Summary
Financial statements are the reports that companies use to convey the financial results of their business activities to various user groups, which can include managers, investors, creditors, and regulatory agencies. Accounting is an information system that measures and records business activities, processes data into reports, and reports results to decision makers. Accounting falls into two categories: financial accounting and managerial accounting. Financial accounting is for external and internal users while managerial accounting is used by internal users only. Financial accounting provides information for managers inside the business and for decision makers outside the organization. Managerial accounting generates inside information for the managers of the organization. Accountants prepare financial accounting information according to professional guidelines called generally accepted accounting principles (gaap). Gaap specify the standards for how accountants must record, measure, and report financial information. The information must be complete, neutral, and accurate.
