ACCOUNTING IN BUSINESS
PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPA
McGraw-Hill/Irwin
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C1
IMPORTANCE OF ACCOUNTING
Accounting
Identifying Select transactions and events Recording Input, measure and classify
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OPPORTUNITIES IN ACCOUNTING
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C2
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Ethics
Beliefs that distinguish right from wrong Accepted standards of good and bad behavior
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Reliable Information
Is trusted by users.
Comparable Information
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The International Accounting Standards Board (IASB) issues International Financial Reporting Standards that identify preferred accounting practices to create harmony among accounting practices of different countries.
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INTERNATIONAL STANDARDS
The International Accounting Standards Board (IASB), an independent group (consisting of 16 individuals from many countries), issues International Financial Reporting Standards (IFRS) that identify preferred accounting practices.
IASB
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INTERNATIONAL STANDARDS
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Cost Principle
Accounting information is based on actual cost. Actual cost is considered objective.
Matching Principle
A company must record its expenses incurred to generate the revenue reported.
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ACCOUNTING ASSUMPTIONS
Now
Future
Going-Concern Assumption
Reflects assumption that the business will continue operating instead of being closed or sold.
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Partnership
Corporation
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CHARACTERISTICS OF BUSINESSES
Characteristic Proprietorship Partnership Corporation Business entity yes yes yes Legal entity no no yes Limited liability no* no* yes Unlimited life no no yes Business taxed no no yes One owner allowed yes no yes
* Proprietorships and partnerships that are set up as LLCs provide limited liability.
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END OF CHAPTER 1