Textbook Notes (363,229)
Canada (158,274)
MGTA01H3 (583)
Chapter 4

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Accounting a comprehensive system for collecting analyzing and communicating financial informationas such it is a system for measuring business performance and translating those measures into information for management decisionsBookkeeping recording accounting transactions it is just one phase of accountingAccounting information system AIS an organized procedure for identifying measuring recording and retaining financial information so that it can be used in accounting statements and management reports its job is to ensure there is consistent dependable financial informationthe system includes all the people reports computers procedures and resources for compiling financial transactionsoThere are numerous users of accounting informationbusiness managers use accounting information to set goals develop plans set budgets and evaluate future prospects employees and unions use accounting information to get paid and to plan for and receive such benefits as health care insurance vacation time and retirement payinvestors and creditors use accounting information to estimate returns to stockholders to determine a companys growth prospects and to decide if the company is a good credit risk before investing or lending taxing authorities use accounting information to plan for tax inflows to determine the tax liabilities of individual and businesses and to ensure that correct amounts are paid in a timely fashion government regulatory agencies rely on accounting information to fulfil their duties the provincial securities commissions for example require firms to file financial disclosures so that potential investors have valid information about a companys financial status oTwo fields of accounting include financial and managerial accounting Financial accounting system the process whereby interested groups are kept informed about the financial condition of a firmit is concerned with external users of informationconsumer groups unions shareholders and government agenciesit prepares income statements and balance sheets which focus on the activities of the company as a whole rather than on individual departments or divisions the information in the reports is mostly historical that is it summarizes financial transactions that have occurred during past accounting periods Managerial management accounting internal procedures that alert managers to problems and aid them in planning and decision making serves internal users managers at all levels employees etcreports to these users serve the companys individual units whether departments
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