BU387 Chapter Notes - Chapter 1-6: Consignee, Retained Earnings, Free Cash Flow
Document Summary
Accounting is best defined by its 3 characteristics: (1) identification, measurement, and communication of financial information (2) about economic entities (3)to interested persons. Financial accounting is the process for preparing financial statements for both internal and external parties. Managerial accounting is the process of identifying, measuring, analyzing and communicating financial information to internal decision makers. Because of the same reason, a proprietary perspective (focusing on shareholder"s needs) is inappropriate. Conceptual framework - a coherent system of interrelated objectives and fundamentals that can lead to consistent standards and that prescribes the nature, function, and limits of financial accounting and financial statements. Assets have 3 essential characteristics: there is some economic benefit to the entity, entity has control over that benefit, benefits result from a past transaction/event. *assets gained through contractual or other rights (i. e. leases) still give rights (thus control) to use the asset despite fact that company does not have legal title.
