Ac Introduction Notes

AC 205 Introduction to Accounting for Decision Analysis

AC 205 Introduction to Accounting for Decision Analysis

Chapter 1 Notes: Accounting & the Business Environment

Accounting: The information system that measures business activities, processes the information into reports, and communicates the results to decision makers.

Two Major Fields of Accounting:

1) Financial Accounting: The field of accounting that focuses on providing information for external decision makers.

2) Managerial Accounting: The field of accounting that focuses on providing information for internal decision makers.

Certified Public Accountants (CPAs): Licensed professional accountants who serve the general public.

Certified Management Accountants (CMAs): Certified professionals who specialize in accounting and financial management knowledge that typically work for a single company.

Financial Accounting Standards Board (FASB): private organization that oversees the creation and governance of accounting standards.

Securities and Exchange Commission (SEC): the US government agency that oversees the US financial markets.

Generally Accepted Accounting Principles (GAAP): the main US accounting rule book, created and governed by the FASB.

Cost Principle: states that acquired assets and services should be recorded at their actual cost.

Going Concern Assumption: assumes that the entity will remain in operation for the foreseeable future.

Accounting Equation: Assets=Liabilities + Equity

Assets: an economic resource that is expected to benefit the business in the future.

Liabilities: debts that are owed to creditors.

Equity: the owners claim to the assets of the business.

Retained Earnings: capital earned by profitable operations of a corporation that is not distributed to stockholders.

Net Income: the result of operations that occurs when total revenues are greater than total expenses.

Revenues: amounts earned from delivering goods or...