Chapter 1.docx

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Department
Financial Accounting
Course
MGAC01H3
Professor
Daga Sandra
Semester
Summer

Description
CHAPTER 1 Accounting theory and practice have always evolved and will continue to evolve  Because of conditions, constraints and influences such as social, economic, political and legal Accounting – the identification, measurement and communication of financial information about economic entities to interested persons Financial Accounting (Financial Reporting) – process of gathering and preparing financial reports for both internal and external parties; that covers all business activities used by the entity Managerial Accounting – process of identifying, measuring, analyzing and communicating financial information to internal decision makers Financial Statements – the principal way of communicating financial information to external parties 1) Balance Sheet 2) Income Statement 3) Statement of cash flows 4) Statement of Owners’ or shareholders’ equity or Statement of retained earnings 5) Note Disclosures  Accounting measures company’s performance accurately and fairly on a timely basis to compare the income and assets of other companies. Therefore, assess the relative risks and returns.  allows investors and creditors to channel their resources more effectively (capital allocation) Stakeholders - parties who have something at risk in the financial reporting environment  This includes anyone who prepares, relies on, reviews, audits, or monitors financial info.
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