Business Administration 2257 Chapter Notes - Chapter 1: Legal Personality, Limited Liability, Financial Statement

• School: Western University
• Department: Business Administration
• Course: Business Administration 2257
• Professor: J S

Document Summary

Chapter 1 the purpose and use of financial statements. Generally accepted accounting principles for business organizations. Accounting equation: assets = liabilities + shareholders equity. Accounting: the process of identifying, recording and communicating the economic events of a business to interested users of the information. Those who plan, organize and run companies. Examples of internal users: finance directors, marketing managers, human resource personnel, production supervisors, company officers. Require detailed information on a timely basis (must be available when needed) Examples of the reports used by internal users: financial comparisons of operating alternatives, projections of profit from new sales campaigns, analyses of sales costs, forecasts of cash needs. Used by investors (shareholders/creditors) to make decisions on whether to buy, hold or sell. Lenders (bankers) use information to decide whether to grant credit. Accounting information must be prepared by individuals with high standards of ethical behaviour. 3 main types of business organizations are proprietorships, partnerships and corporations.