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Accounting: Information For Decision Making
Accounting: Information For Decision Making
Accounting
Accounting is defined as "the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof
Accounting Cycle
Transaction
Journal Entries
Bookkeeping
General Ledger Trial Balance
Accounting
Financial Statements
Financial
Tax
Managerial
Accounting System
An accounting system consists of the personnel, procedures, devices, and records used by an organization to:
Accounting System
The accounting process
Economic activities
Accounting links decision makers with economic activities and with the results of their decisions.
Decision makers
Accountin g Informatio n
Actions (decisions)
Accounting System
Factors Affecting the Structure of Accounting System Companys need of accounting information Availability of resources
Accounting System
Users of Accounting
External Users
Objectives of External Financial of financial information are The primary external users Reporting
investors and creditors.
External Users
Factor Influencing Decisions Return on Investment Return of Investment Objectives of External Financial Reporting Investment and credit decisions. Assessment of amount, timing and uncertainty of future cash flows. Economic resources, claims to resources, and changes in resources and claims.
External Users
Financial Statements Balance Sheet Income Statement Statement of cash flows
Internal Users
Decision making by Internal Parties (Financial Accounting)
Board of Directors Chief Executive Officer Chief Financial Officer Vice Presidents Business Unit Managers Plant Managers Store Managers Line Supervisors
Internal Users
Objectives of Internal Managerial Reporting Goals, objectives and mission. Assessing both the past performance and future directions of the enterprise Decision Making
Institutional Features Professional Organizations Personal Competence, Judgment and Ethical Behavior
Accounting Rules
Bookkeeping
Bookkeeping is the recording of financial transactions