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© The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams Haka Bettner
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Page 1: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-1

Financial & Managerial AccountingFinancial & Managerial Accounting

The Basis for Business Decisions

THIRTEENTH EDITION

Williams Haka Bettner

Page 2: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-2

ACCOUNTING:INFORMATION FOR DECISION MAKING

Chapter

1

Page 3: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-3

Accounting

information

The accounting

process

Decision makers

Economic activities

Actions (decisions)

Accounting “links” decision

makers with economic

activities and with the results of

their decisions.

Page 4: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-4

Types of Accounting InformationTypes of Accounting Information

Financial

Managerial

Tax

Page 5: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-5

Information Users

InvestorsCreditors ManagersOwnersCustomersEmployeesRegulators -SEC -IRS -EPA

Information Users

InvestorsCreditors ManagersOwnersCustomersEmployeesRegulators -SEC -IRS -EPA

Decisions Supported

Performance evaluationsStock investmentsTax strategiesLabor relationsResource allocationsLending decisionsBorrowing

Decisions Supported

Performance evaluationsStock investmentsTax strategiesLabor relationsResource allocationsLending decisionsBorrowing

Information SystemInformation System

Financial Information

ProvidedProfitability

Financial position

Cash flows

Financial Information

ProvidedProfitability

Financial position

Cash flows

Page 6: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-6

Basic Functions of an Accounting System

Basic Functions of an Accounting System

Interpret and record business

transactions.

Payment

Car

Page 7: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-7

Basic Functions of an Accounting System

Basic Functions of an Accounting System

Summarize and

communicate information to

decision makers.

Classify similar

transactions into useful

reports.

Interpret and record business

transactions.

Page 8: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-8

External Users of Accounting Information

External Users of Accounting Information

•Owners

•Creditors

•Labor unions

•Governmental agencies

•Suppliers

•Customers

•Trade associations

•General public

Page 9: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-9

Provide information about economic resources, claims to resources, and changes in resources and claims.

Provide information useful in assessing amount, timing and

uncertainty of future cash flows.

Provide information useful in making investment and credit decisions.

(Specific)

(General)

Objectives of

Financial Reporting

Page 10: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-10

Objectives of External Financial Reporting

Objectives of External Financial Reporting

The primary financial

statements.

Income Statement

Balance Sheet

Statement of Cash Flows

Page 11: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-11

Characteristics of Externally Reported Information

Characteristics of Externally Reported Information

A Means to an End

A Means to an End

Broader than Financial

Statements

Broader than Financial

Statements

Historical in Nature

Historical in Nature

Results from Inexact and Approximate Measures

Results from Inexact and Approximate Measures

Based on General-Purpose

Assumption

Based on General-Purpose

Assumption

Usefulness Enhanced via Explanation

Usefulness Enhanced via Explanation

Page 12: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-12

Users of Internal Accounting Information

Users of Internal Accounting Information

Board of directorsChief executive officer (CEO)Chief financial officer (CFO)Vice presidentsBusiness unit managersPlant managersStore managersLine supervisors

Page 13: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-13Typical S im ple O rganization C hart

PlantAccountant

PlantManager

PlantAccountant

PlantManager

Business UnitManager

V.P. HumanResources

V.P. InformationServices

Chief FinancialOfficer (CFO)

Chief ExecutiveOfficer(CEO)

Board ofDirectors(Owners)

Page 14: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-14

Objectives of Management Accounting Information

Objectives of Management Accounting Information

To help achieve goals and missions

To help achieve goals and missions

To help evaluate and reward

decision makers

To help evaluate and reward

decision makers

Page 15: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-15

Characteristics of Management Accounting Information

Characteristics of Management Accounting Information

TimelinessTimeliness

Identify Decision

Maker

Identify Decision

Maker

Oriented Toward Future

Oriented Toward Future

Measures of Efficiency and Effectiveness

Measures of Efficiency and Effectiveness

A Means to an End

A Means to an End

Page 16: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-16

Integrity of Accounting InformationIntegrity of Accounting Information

Institutional FeaturesGenerally Accepted Accounting Principles (GAAP)Financial Accounting Standards BoardSecurities and Exchange CommissionInternal Control StructureAuditsLegislation

Page 17: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-17

Integrity of Accounting InformationIntegrity of Accounting Information

Professional OrganizationsAmerican Institute of Certified Public Accountants Institute of Management AccountantsInstitute of Internal AuditorsAmerican Accounting Association

Page 18: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-18

Integrity of Accounting InformationIntegrity of Accounting Information

Competence, Judgment and Ethical BehaviorCertified Public Accountants (CPAs)Certificate in Management Accounting (CMA)Certificate in Internal Auditing (CIA)Code of Professional Conduct

CPA

Page 19: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-19

Integrity of Accounting InformationIntegrity of Accounting Information

Careers in AccountingPublic AccountingManagement AccountingGovernmental AccountingAccounting Education

Page 20: © The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 1-1 Financial & Managerial Accounting The Basis for Business Decisions THIRTEENTH EDITION Williams.

© The McGraw-Hill Companies, Inc., 2005McGraw-Hill/Irwin

1-20

End of Chapter 1End of Chapter 1


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