ACC 110 Chapter Notes - Chapter 1: International Financial Reporting Standards, Bookkeeping, Canadian Business

15 views4 pages
Published on 6 Oct 2012
School
Ryerson University
Department
Accounting
Course
ACC 110
Professor
Chapter ONE
The Accounting Environment: What is Accounting and Why is it
Done?
What is Accounting?
Accounting – a system for gathering data about an entity’s economic activity,
processing
and organizing the data to produce useful information about the entity, and
communicating the information to people who use it to make decisions
(economic information that enables users to make investment & credit
decisions)
Communication is important but challenging
Effective decision making requires information, accntg provides this
2 Subfields:
1) Financial Accounting – provides information to people external to entity
2) Managerial Accounting – addresses the information needs & decisions of the
managers of the entity
Entity – an economic unit, such as an individual, proprietorship, government,
not-forprofit
organization etc. In an accounting environment, an entity is an economic unit
that a
stakeholder wants accounting information about.
Provide accounting information stakeholder need
Reports must be tailored to suit entity’s accounting environment
Data v Information
Data – raw, unprocessed facts about an entity’s economic activity, entered in
accounting
system
Information – results from organizing & presenting data
Bookkeeping v Accounting
Why Does Accounting Matter?
Has Economic consequences (for stakeholders) – the effect of actions and
decisions on
people’s wealth
Why Do People Need & Want Accounting Information?
Information to make business decisions
Cost-benefit trade off – the concept of comparing the benefits of an action with
the
Unlock document

This preview shows page 1 of the document.
Unlock all 4 pages and 3 million more documents.

Already have an account? Log in

Document Summary

The accounting environment: what is accounting and why is it. 2 subfields: financial accounting provides information to people external to entity, managerial accounting addresses the information needs & decisions of the managers of the entity. Entity an economic unit, such as an individual, proprietorship, government, not-forprofit organization etc. In an accounting environment, an entity is an economic unit that a stakeholder wants accounting information about: provide accounting information stakeholder need, reports must be tailored to suit entity"s accounting environment. Data v information: data raw, unprocessed facts about an entity"s economic activity, entered in accounting system, information results from organizing & presenting data. Has economic consequences (for stakeholders) the effect of actions and decisions on people"s wealth. Cost-benefit trade off the concept of comparing the benefits of an action with the costs of the action, and taking action only if the benefits exceed the costs: relates to information collection.

Get OneClass Grade+

Unlimited access to all notes and study guides.

YearlyMost Popular
75% OFF
$9.98/m
Monthly
$39.98/m
Single doc
$39.98

or

You will be charged $119.76 upfront and auto renewed at the end of each cycle. You may cancel anytime under Payment Settings. For more information, see our Terms and Privacy.
Payments are encrypted using 256-bit SSL. Powered by Stripe.