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ADMS 2500 - Module 1 Notes.docx

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York University
Administrative Studies
ADMS 2500
Carl Lapp

ADMS 2500 – FINAL EXAM NOTES MODULE 1 Accounting:  System for measuring the results of business activities and communicating those results to interested users  Language of business  The process of recording, classifying, reporting, and interpreting the financial data of an organization. Private Sector Accounting:  Consists of both Profit &Not For Profit  Employers include: manufacturers, wholesalers, and retailers; Jobs include: data keeping, reporting, and designing EDP systems  Assist management in planning and controlling the firms operations  Controller is the head of the accounting department; interacts with executive management  Internal Auditor investigates policies and procedures designed to safeguard assets, promote operational efficiency, and provide reliable information Public Sector Accounting:  Consists of Government, Profit &Not For Profit  Includes both Financial and Managerial Accounting  Accountants in public accounting firms are granted licenses to practice by their professional association  Example: Auditing of Governmental Agencies & Private Firms conducting business with Government Financial Accounting:  Preparation of reports for use by persons outside a firm.  Example: Potential Investor, Banks (Extending Credit)  Financial Statement is the most commonly used report, as it conforms to GAAP  Financial accounting reports tend to be more standardized in terms of format and content than those used in managerial accounting. Managerial Accounting:  Preparation of reports for use by managers within a firm.  Users of information within a firm can specify the types of information they need for their decisions; managerial accounting reports are designed to satisfy these needs.  Example: Corporate Treasurer, Production Manager, Sales Manager  Deciding whether to borrow short term, how to route special order, determining what prices to charge Financial Reporting Process  External Environment -> Accounting System -> Published Financial Statements, Internal Management Reports, Special Reports for Regulators & Other Bodies Financial Statements Information need Report name Report Description How well is the enterprise doing? Is it profitable? Income Statement Presents the results of operating activities for a period of time Lists the enterprise's assets (economic Will the enterprise do as well in the future? Does it have resources), its liabilities (obligations) and the resources it needs? What promises were made to Balance Sheet obtain these resources, i.e., what are its obligations? the owners' residual interest at a point in time. Are owners withdrawing resources or investing more Shows the increases in equity from Statement of Equity operating profits and new investment and resources? distribution of assets to owners Reports the change in cash and the cash Does the enterprise generate enough cash to be self- sustaining? If not, where does it get cash to survive? If it Cash Flow Statement inflows and outflows from operating, financing and investing activities for a generates excess cash, how does it use it? period of time. Balance Sheet  Lists a Firm’s Assets (Resources), Liabilities (Obligations), and Owner’s Equity (owners' invested capital plus undistributed earnings) on a given date.  Balance Sheet Equation: Liabilities + Equity = Assets  Double Entry Bookkeeping: Every change in an asset, liability or owner's equity item, at least one othe
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