financial data - 1

What is Accounting?

The process of ........ economic information to permit informed judgments and business decisions by users of the information.

 

Accounting is an information system that:

• Measures business activities

• Processes data into reports

• Communicates results to decision-makers

• Sources of funding and capital

Business Decisions:

Accounting helps companies, their shareholders, and management make the following decisions:

• Sources of funding and capital

• Costing and pricing

• Analyze the performance of various business groups within the company

• Chcecking the profilability and performance of the firm

What are Business Transactions:

1.Economic events that ........ of the business.

Every ........

2...... = a company purchases (or receives) elements and pays (or receives an amount of money), and another company gives products or services (or receives) and receives the related amount of money.

The users of the financial information are the following stakeholders

Financial Accounting is for

• decision-makers outside the entity: investors, creditors, government agencies and the public.

   

• managers inside the entity: budgets, forecasts and projections.

Managerial Accounting

• decision-makers outside the entity: investors, creditors, government agencies and the public.

   

• managers inside the entity: budgets, forecasts and projections.

International Financial Reporting Standards (IFRS)

• Formulated by the International Accounting Standards Board (IASB)

• Formulated by the Financial Accounting Standards Board (FASB)

Generally Accepted Accounting Principles (GAAP).

• Formulated by the International Accounting Standards Board (IASB)

• Formulated by the Financial Accounting Standards Board (FASB)

Financial reporting provides much-needed information to capital market participants given:

▶ Information asymmetry between savers and entrepreneurs.

▶ Conflicts of interests between savers and entrepreneurs.

▶ Expertise asymmetry between savers and entrepreneurs.