MGT 11A Chapter Notes - Chapter 1: Balance Sheet, Accounts Receivable, Accounting Equation
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Accounting = information & measurement system that identifies, records, and communicates rele(cid:448)a(cid:374)t, relia(cid:271)le, a(cid:374)d (cid:272)o(cid:373)para(cid:271)le i(cid:374)for(cid:373)atio(cid:374) a(cid:271)out a(cid:374) orga(cid:374)izatio(cid:374)"s (cid:271)usi(cid:374)ess a(cid:272)ti(cid:448)ities. When the activity is identified, then relevant transactions and events must be selected. Process: identify -> record -> communicate recordkeeping/bookkeeping = recording of transactions and events, can be manually/electronically. Important: both software & recordkeeping and accounting knowledge need each other to be used successfully (cid:858)la(cid:374)guage of the (cid:271)usi(cid:374)ess(cid:859) (cid:271)/(cid:272) all o(cid:396)ga(cid:374)izatio(cid:374)s ha(cid:448)e a(cid:374) a(cid:272)(cid:272)ou(cid:374)ti(cid:374)g i(cid:374)fo(cid:396)(cid:373)atio(cid:374) s(cid:455)ste(cid:373) to communicate data to help w/ making better decisions. E(cid:454)te(cid:396)(cid:374)al use(cid:396)s a(cid:396)e (cid:374)ot di(cid:396)ectly involved in running the organization. Ex. shareholders, lenders, directors, customers, suppliers, regulators, lawyers, brokers, press. Financial accounting aims to serve external users by providing them general-purpose financial statements. I(cid:374)te(cid:396)(cid:374)al use(cid:396)s a(cid:396)e di(cid:396)e(cid:272)tl(cid:455) i(cid:374)(cid:448)ol(cid:448)ed i(cid:374) (cid:373)a(cid:374)agi(cid:374)g & ope(cid:396)ati(cid:374)g the o(cid:396)ga(cid:374)izatio(cid:374) Ex. officers, sales staff, managers, budget officers, internal auditors, controllers.
