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Chapter 4

MGTA02H3 Chapter Notes - Chapter 4: Forensic Accountant, Salary, Management Consulting


Department
Management (MGT)
Course Code
MGTA02H3
Professor
Chris Bovaird
Chapter
4

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WHAT IS ACCOUNTING AND WHO USES IT?
-accounting: a comprehensive system for collecting, analyzing, and communicating financial
information
-bookkeeping: recording accounting transactions
-accounting 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
-many users for accounting information: business managers, employees and unions, investors...
WHO ARE ACCOUNTANTS AND WHAT DO THEY DO
-Controller: The individual who manages all the firm’s accounting activities
Financial and Managerial Accounting
-financial accounting system: the process whereby interested groups are kept informed about
the financial condition of a firm (concerned with external users like consumers, union...)
-helps ensure users can compare information from different or same company
-information in such reports is mostly historical (occurred in past accounting periods)
-managerial (management) accounting: internal procedures that alert managers to problems
and aid them in planning and decision making
-designed to aid in planning, they are forward looking rather than historical
Professional Accountants
-Chartered accountants (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
-Certified general accountant (CGA): an individual who has completed an education program
and passed a national exam; works in private industry or a CGA firm
-certified management accountant (CMA): an individual who has completed a university
degree, passed a national examination, and completed a strategic leadership program; works in
industry and focusses on internal management accounting
Accounting Services
-audit: an accountant’s examination of a company’s financial records to determine if it used
proper procedures to prepare its financial reports
-forensic accountant: an accountant who tracks down hidden funds in business firms,
usually as part of a criminal investigation
-generally accepted accounting principles (GAAP): standard rules and methods used by
accountants in preparing financial reports
-tax services are also performed to help clients with tax returns
-management consulting services: specialized accounting services to help managers resolve a
variety of problems in finance, production scheduling, and other areas
Private Accountants
-private accountant: an accountant hired as a salaried employee to deal with a company’s day-
to-day accounting needs
MGTA04 Chapter 4
1
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