Textbook Notes (363,134)
Canada (158,214)
MGTA02H3 (361)
Chapter 4

chapter four book/ class notes

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Chapter 4: Understanding Accounting Issues What is a Accounting and Who Uses It accounting: a comprehensive system for collecting, analyzing, and communicating financial information bookkeeping: recording accounting transactions (just one phase of accounting) by sorting, analyzing, and recording thousands of transactions, accountants can determine how well a business is being managed and how financially strong it is (but accounting systems can produce distorted results that cause problems for owners and managers) accounting information system: an organized procedure for identifying measuring, recording, and retaining financial information so that it can be used in accounting statements and management reports (dependable, consistent, mandatory system) users of accounting information: business managers: to set goals , develop plans, set budgets, and evaluate future prospects employees and unions: to get paid and to plan for and receive such benefits as healthcare, insurance, vacation time and retirement pay investors and creditors: to estimate returns to stockholders, to determine a companys growth prospects, and to decide if it is a good credit risk before investing or lending taxing authorities: to plan for tax inflows, to determine the tax liabilities of individuals and businesses, and to ensure that correct amounts are paid in a timely fashion government regulatory agencies: to fulfill 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 Who are Accountants and What Do They Do controller : the individual who manages all the firms accounting activities (head of AIS) < ensures that reports and statements needed for planning, controlling, and decision making activities are provided financial accounting system: the process whereby interested groups are kept informed about the financial condition of a firm (concerned with external users of info such as consumer groups, unions, govt) < prepares and publishes income statements and balance sheets at regular intervals < looks at company as a whole managerial accounting: internal procedures that alert managers to problems and aid them in planning and decision making (serves internal users, such as different departments) < ex. managers to monitor current projects and plan for future activities < ex. engineers may look at costs of materials or production to make operations improvement < internal reports are forward looking in nature, not historical Professional Accountants chartered accountant (CA): an individual who has met certain experience and education requirements and has passed a licensing examination; acts as an outside accountant for other firms (granted by The Canadian Institute of Chartered Accountants to people who have a university degree, competed an educational program and passed the national exam) < half CA are public, half are government or industry workers < CA focus on external financial reporting certified general accountant (CGA): an individual who has completed an education program and passed a national exam; works in a private industry or a CGA firm (formerly not allowed to audit financial statements of publicly held companies, but this is changing in most provinces) < some work in private CGA firms, CA firms < focus on external financial reporting and use computer as management accounting tool certified management accountant (CMA): an individual who has completed a university degree, passed a national www.notesolution.com
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