Business and Accounting
| Types of Businesses |
| 3 types of businesses operate for profit |
| SERVICE |
| Ex: Delta Airlines - transportation services, Walt Disney - entertainment services. |
| MERCHANDISING |
| Ex: Wal-Mart - general merchandise, Amazon.com - internet books, music and videos |
| MANUFACTURING |
| Ex: General Motors Corporation - cars, trucks, vans, Dell Inc. - personal computers |
| What is Accounting? |
| Defined as an information system that provides reports to users about the economic activities and conditions of a business. |
| The Role of Accounting |
| To provide information for managers to use in operating a business. |
| In the Language of Business |
| Accounting serves as the means through which business financial information is communicated to users. |
| Process of Providing Information |
| - Identify user |
| - Assess user's information needs |
| - Define the accounting system to use |
| - Record economic data |
| - Prepare accounting reports |
| Users of Accounting |
| Internal: Managers employees |
| External: Customers, creditors, investors, government |
| |
Uses of Accounting
| Internal Uses of Accounting |
| Branch: Management Accounting |
| Objective: To provide timely information for managers to make decisions within the business. |
| Information is sensitive and includes the customer, prices and plans to expand the business. |
| External Uses of Accounting |
| Branch: Financial Accounting |
| Objective: To provide timely information for users to make decisions outside of the business. |
| Information here is useful for creditors and lenders who look at financial reports on operations and conditions of a business. |
| General-purpose financial statements are one type of financial reports. |
Opportunities in Accounting
| PRIVATE ACCOUNTING |
| Employed by companies, government and not-for-profits. |
| Careers: Bookkeeper, Payroll Clerk, General Accountant, Budget Analyst, Cost Accountant, Internal Auditor, Information Technology Auditor |
| Certifications: Certified Payroll Professional (CPP), Certified Management Accountant (CMA), Auditor (CIA), Certified Information System Auditor (CISA) |
| PUBLIC ACCOUNTING |
| Employed individually or as a member of a public accounting firm in tax or audit services. |
| Careers: Local firms, Public firms |
| Certifications: Certified Public Accountant (CPA) |
| |
Ethics in Accounting
| Unethical Practices in Accounting |
| Failure of Individual Character |
| Pressure from supervisors to meet company's expectations leads to small violations that adds up. |
| Culture of Greed and Ethical Indifference |
| Senior managers set the culture and can create indifference and greed to the truth. |
| Guideline For Ethical Conduct |
| 1. Identify an ethical decision by using honesty and fairness |
| 2. Identify the consequences and it's effects on others |
| 3. Consider your obligations and responsibilities to the affected |
| 4. Make a decision that is ethical and fair |
| Sarbanes-Oxeley Act passed in 2002 (SOX) to oversee the accounting profession through the Public Accounting Oversight Board (PCAOB). |
| Accounting and Business Frauds |
| - Aldelphia Communications |
| - American International Group (AIG) |
| - American Online Inc. and PurchasePro |
| - Computer Associates International Inc. |
| - Enron |
| - Fannie Mae |
| - HealthSouth |
| - Qwest Communications International Inc. |
| - Tyco International Ltd. |
| - WorldCom |
| - Xerox Corporation |
|
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Contents
Textbook Summary of Corporate Financial Accounting 10e, Ch 1, by Warren/Reeve/Duchac.
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