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Seventeenth Edition
Williams Haka Bettner Carcello
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Accounting
Information for Decision Making
Chapter 1
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
The
Accounting
Process
Accounting links
decision makers
with economic Accounting
Economic activities and Information
Activities
with the results of
their decisions.
Reported
Results of
Decision
Actions Actions
(decisions)
Makers (decisions)
1-3
Types of Accounting Information
Financial Tax
Management
1-4
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.
1-5
Information
Information System
System
Information
Information Financial
Financial Decisions
Decisions
Users
Users Information
Information Supported
Supported
Investors
Investors Provided
Provided Performance
Performance
Creditors evaluations
Creditors Profitability
Profitability evaluations
Managers Stock
Managers Financial
Financial Stock
Owners
Owners position investments
investments
position
Customers Tax
Taxstrategies
Customers Cash
Cashflows
flows strategies
Employees
Employees Labor
Labor
Regulators
Regulators relations
relations
--SEC
SEC Resource
Resource
--IRS
IRS allocations
allocations
--FTC
FTC Lending
Lending
decisions
decisions
Borrowing
Borrowing
1-6
Determining Information Needs
Risk
Assessment
Control
Activities
Information and
Communication
Monitoring
1-9
External Users of Accounting
Information
• Owners
• Creditors
• Potential investors
• Labor unions
• Governmental agencies
• Suppliers
• Customers
• Trade associations
• General public
1-10
Objectives of External Financial
Reporting
Provide specific information about
economic resources, claims to resources,
and changes in resources and claims.
Balance Income
Sheet Statement
Statement
of Cash
Flows
1-12
Characteristics of Externally
Reported Information
AAMeans
Meanstotoan
an
End
End
Usefulness
Usefulness Broader
Broaderthan
than
Enhanced
Enhancedviavia Financial
Financial
Explanation
Explanation Statements
Statements
Based
Basedon
onGeneral-
General-
Purpose Historical
Historicalin
in
Purpose Nature
Assumption
Assumption Nature
Results
Resultsfrom
fromInexact
Inexactand
and
Approximate
ApproximateMeasures
Measures
1-13
Users of Internal Accounting
Information
Board of directors
Chief executive officer (CEO)
Chief financial officer (CFO)
Vice presidents
Business unit managers
Plant managers
Store managers
Line supervisors
1-14
Owners
Typical
Board of
Directors Simple
Organization
Chief Executive
Officer Chart
(CEO)
Plant Plant
Managers Managers Controller Treasurer
Plant Plant
Accountants Accountants
1-15
Objectives of Management
Accounting Information
To
Tohelp
helpachieve
achieve
goals
goalsand
and
missions
missions
To
Tohelp
helpevaluate
evaluate
and
andreward
reward
decision
decisionmakers
makers
1-16
Characteristics of Management
Accounting Information
Timeliness
Timeliness
Identify
Identify
AAMeans Decision
DecisionMaker
Meanstotoan
an Maker
End
End
Measures
Measuresof of Oriented
OrientedToward
Toward
Efficiency
Efficiencyand
and Future
Future
Effectiveness
Effectiveness
1-17
Institutional Features
1-18
Professional Organizations
1-19
Competence, Judgment and
Ethical Behavior
Certified Public Accountant (CPA)
Certified Management Accountant (CMA)
Certified Internal Auditor (CIA)
1-20
Careers in Accounting
Public Accounting
Management Accounting
Governmental Accounting
Accounting Education
1-21
What About Bookkeeping?
Bookkeeping is the clerical side of accounting—
the recording of routine transactions and day-to-
day record keeping.
1-23
Accounting as a Stepping-Stone
An accounting background is invaluable for
key positions in management or
administration, as well as helpful in many
aspects of your personal lives, including
personal budgeting, retirement decisions, and
avoiding investment fraud.
1-24
Ethics, Fraud & Corporate
Governance
Corporate governance entails corporate
structures and processes for overseeing
the company’s affairs to ensure that the
company is being managed with the best
interests of shareholders in mind.
1-25
End of Chapter 1
McGraw-Hill/Irwin 1-26