Download - Kimmel Financial 6e PowerPoint Ch01
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1. Describe the primary forms of business organization.
2. Identify the users and uses of accounting information.
3. Explain the three principal types of business activity.
4. Describe the content and purpose of each of the financial
statements.
. Explain the meaning of assets! liabilities! and stoc"holders#
e$uity! and state the basic accounting e$uation.
%. Describe the components that supplement the financial
statements in an annual report.
Stud! O"#$cti%$&Stud! O"#$cti%$&
Stud! O"#$cti%$&Stud! O"#$cti%$&
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Internal usersExternal users
Ethics in financial
reporting
Fo()& o*Fo()& o*
+u&in$&&+u&in$&&
O(ganiationO(ganiation
Fo()& o*Fo()& o*
+u&in$&&+u&in$&&
O(ganiationO(ganiation
U&$(& and U&$&U&$(& and U&$&
o* Financialo* Financial
In*o()ationIn*o()ation
U&$(& and U&$&U&$(& and U&$&
o* Financialo* Financial
In*o()ationIn*o()ation
+u&in$&&+u&in$&&
Acti%iti$&Acti%iti$&
+u&in$&&+u&in$&&
Acti%iti$&Acti%iti$&Co))unicatingCo))unicating
ith U&$(&ith U&$(&
Co))unicatingCo))unicating
ith U&$(&ith U&$(&
&oleproprietorship
'artnership
(orporation
)inancingInvesting
*perating
Income statement+etained earnings
statement
,alance sheet
&tatement of cash
flo-s
Interrelationshipsof statements
*ther elements of
an annual report
Int(oduction to Financial Stat$)$nt&Int(oduction to Financial Stat$)$nt&
Int(oduction to Financial Stat$)$nt&Int(oduction to Financial Stat$)$nt&
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/(o0(i$to(&hi0 /a(tn$(&hi0 Co(0o(ation
&imple to
establish &hared control
,roader s"ills
and resources
ax advantages
Easier to transfer
o-nership Easier to raise
funds
/o personal
liability
Fo()& o* +u&in$&& O(ganiationFo()& o* +u&in$&& O(ganiation
Fo()& o* +u&in$&& O(ganiationFo()& o* +u&in$&& O(ganiation
0enerally o-ned
by one person
&imple to
establish
*-ner
controlled
ax advantages
SO 1 Describe the primary forms of business organization.SO 1 Describe the primary forms of business organization.
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Manag$)$nt
u)an
R$&ou(c$&Taxing
Autho(iti$&
La"o(Union&
R$gulato(!
Ag$nci$&
Ma(3$ting
Financ$
In%$&to(&
C($dito(&
Cu&to)$(&
Int$(nal
U&$(&
Ext$(nal
U&$(&
4ho U&$& Accounting Data
U&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ation
U&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ation
SO 2 Identify the users and uses of accounting information.SO 2 Identify the users and uses of accounting information.
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6u$&tion& A&3$d "!Int$(nal U&$(& U&$(
1. (an -e afford to give our
employees a pay raiseu)an R$&ou(c$&
2. hat price for our product
-ill maximize net income
3. hich product line is most
profitable
4. Is cash sufficient to pay
dividends to the stoc"holders
Ma(3$ting
Manag$)$nt
Financ$
U&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ation
SO 2 Identify the users and uses of accounting information.SO 2 Identify the users and uses of accounting information.
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6u$&tion& A&3$d "!Ext$(nal U&$(& U&$(
1. Is the company earning
satisfactory incomeIn%$&to(&
2. o- does Disney compare in
size and profitability -ith ime
arner
3. ill nited 5irlines be able to
pay its debts as they come
due
In%$&to(&
C($dito(&
U&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ation
SO 2 Identify the users and uses of accounting information.SO 2 Identify the users and uses of accounting information.
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Ethic& In Financial R$0o(tingnited &tates regulators and la-ma"ers -ere very concerned
that the economy -ould suffer if investors lost confidence in
corporate accounting because of unethical financial reporting.
+ecent *inancial &candal&include6 En(on! 4o(ldCo)!
$althSouth! AI:! and others.
(ongress passed Sa("an$&-Oxl$! Act o* 2992.
Effective financial reporting depends on sound ethical
behavior.
U&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ation
SO 2 Identify the users and uses of accounting information.SO 2 Identify the users and uses of accounting information.
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U&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ation
SO 2 Identify the users and uses of accounting information.SO 2 Identify the users and uses of accounting information.
Illu&t(ation 1-
St$0& in anal!ing $thic& ca&$&
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hich of the follo-ing did not result from the &arbanes7
*xley 5ct
a. op management must no- certify the accuracy of
financial information.
b. 'enalties for fraudulent activity increased.
c. Independence of auditors increased.
d. ax rates on corporations increased.
6u$&tion
U&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ationU&$(& and U&$& o* Financial In*o()ation
SO 2 Identify the users and uses of accounting information.SO 2 Identify the users and uses of accounting information.
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5ll businesses are involved in three types of activity 8
financing!
investing!
and operating.
+u&in$&& Acti%iti$&+u&in$&& Acti%iti$&+u&in$&& Acti%iti$&+u&in$&& Acti%iti$&
SO 3 Explain the three principal types of business actiity.SO 3 Explain the three principal types of business actiity.
he accounting in*o()ation &!&t$)"eeps trac" of
the results of each of these business activities.
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To 0(i)a(! &ou(c$& o* out&id$ *und& a($;
1< +o((oing )on$!
5mounts o-ed are called lia"iliti$&.
'arty to -hom amounts are o-ed are c($dito(&.
Not$& 0a!a"l$and "ond& 0a!a"l$are different type
of liabilities.
2< I&&uing &ha($& o* &toc3 *o( ca&h
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In%$&ting Acti%iti$&
/u(cha&$ o* ($&ou(c$& a co)0an! n$$d& to
o0$(at$