Textbook Notes (368,432)
Canada (161,877)
MGTA02H3 (363)
Chapter 4

Chapter 4- Understanding Accounting Issues

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Management (MGT)
Bill Mc Conkey

Chapter 4- Understanding Accounting Issues WHAT IS ACCOUNTING AND WHO USES IT? Accounting- a complete system for collecting, analyzing, and communicating financial information A system for measuring performance and translating those measures into information for management decisions Bookkeeping- recording accounting transactions Uses performance measures to prepare performance reports for owners, the public, and regulatory agencies By sorting, analyzing, and recording thousands of transactions, accountants can determine how well a business is being managed and how financially strong it is Accounting information system (AIS) an organized procedure for identifying, measuring, recording, and retaining financial info so that it can be used in accounting statements and management goods Users of accounting information: o Business managers- uses it tot set goals, develop plans, set budgets, and evaluate future prospects o Employees and nations- uses it to get paid and to plan for and receive such benefits (health care, insurance, vacation time and retirement pay) o Investors and creditors- uses it 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 o Taxing authorities- uses it 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 o Government regulatory agencies- uses it to fulfill their duties (Ex: provincial securities commissions require firms to file financial disclosures so that potential investors have valid info about a companys financial status) 1- Explain the role of accountants and distinguish between the kinds of works done by public and private accountants WHO ARE ACCOUNTANTS AND WHAT DO THEY DO? Controller the individual who manages all the firms accounting activities Ensures that the AIS provides the reports and statements needed for planning, controlling, and decision-making activities Financial and Managerial Accounting 1 www.notesolution.com
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