Textbook Notes (362,842)
Canada (158,078)
MGAB01H3 (126)
G.Quan Fun (21)
Chapter 1

Chapter 1 notes

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University of Toronto Scarborough
Financial Accounting
G.Quan Fun

Chapter 1 The Purpose and Use of Financial Statements Notes Accounting Matters N accounting : information system that identifies and records economic events of organization, and communicates them to wide variety of interested users N accountinglanguage of business; consistently ranked as one of top career opportunities Users and Uses of Accounting Internal Users N plan, organize, and run company or work for company N include finance directors, marketing managers, HR personnel, production supervisors, company officers External Users N investors use information to make decisions to buy, hold, or sell their ownership interest N creditors use information to evaluate the risks of granting credit or lending money N investors and creditors are main external users, but others use it including labour unions, customers, taxing authorities, regulatory agencies, and economic planners Ethical Behaviour N ethics is of utmost importance to accountants and decision-makers who rely on financial info N fortunately, most individuals in business are ethical, whose actions are legal and responsible Forms of Business Organization N proprietorship : a business owned by one person N partnership : a business owned by more than one person N corporation : business organized as separate legal entity having ownership divided into transferable shares held by shareholders Proprietorships N only relatively small capital is needed to start business N proprietor receives any profits, suffers any losses, and is personally liable for any debts N no legal distinction between business as economic unit and owner Partnerships N similar to proprietorships except that there is more than one owner N each partner generally has unlimited liability for all debts, even if other partner has created it Corporations N buying shares in corporation is often more attractive than investing in proprietorship or partnership because it is easier to sell N many businesses start out as proprietorship or partnership and eventually incorporate N public corporationscommonly distribute their financial statements to shareholders, creditors other interested parties, and the general public upon request N private corporationsdo not issue publicly
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