3. Accounting information The accounting process Decision makers Economic activities Actions (decisions) Accounting “links” decision makers with economic activities and with the results of their decisions.
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5. Identification Select economic events (transactions) Recording Record, classify and summarize Prepare accounting reports Analyze and interpret for users Communication ILLUSTRATION 1-1 THE ACCOUNTING PROCESS Accounting Reports SOFTBYTE Annual Report
8. Accounting Systems An accounting system consists of the personnel, procedures, technology, and records used by an organization to develop accounting information and to communicate this information to decision makers.
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11. Components of Internal Control Control Environment Risk Assessment Control Activities Information and Communication Monitoring
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13. ILLUSTRATION 1-3 QUESTIONS ASKED BY EXTERNAL USERS Is the company earning satisfactory income? Will the company be able to pay its debts as they come due? How does the company compare in size and profitability with its competitors? What do we do if they catch us?
14. Objectives of External Financial Reporting Provide information about economic resources, claims to resources, and changes in resources and claims. Provide information useful in assessing amount, timing and uncertainty of future cash flows. Provide information useful in making investment and credit decisions. (Specific) (General)
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16. Characteristics of Externally Reported Information A Means to an End Broader than Financial Statements Historical in Nature Results from Inexact and Approximate Measures Based on General-Purpose Assumption Usefulness Enhanced via Explanation
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18. ILLUSTRATION 1-2 QUESTIONS ASKED BY INTERNAL USERS Is cash sufficient to pay bills? What is the cost of manufacturing each unit of product? Can we afford to give employee pay raises this year? Which product line is the most profitable?
19. Objectives of Management Accounting Information To help achieve goals and missions To help evaluate and reward decision makers
20. Characteristics of Management Accounting Information Timeliness Identify Decision Maker Oriented Toward Future Measures of Efficiency and Effectiveness A Means to an End
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25. ACCOUNTING CAREER LADDER 10+ years 6 to 8 years 2 to 4+ years Entry level Partner Public Accounting Audit Manager Senior Auditor Junior Auditor Private Accounting VP Finance and Chief Financial Officer Corporate Controller Senior Accountant Junior Accountant