After reading this chapter, you will be able to: Define accounting and describe the different uses of accounting information; demonstrate the accounting process; decipher the various components of an income statement in order to evaluate a firm''s bottom line; interpret a company''s balance sheet to determine its current financial position; analyze financial statements, using ratio analysis, to evaluate a company''s performance; assess a company''s financial position using its accounting statements and ratio analysis.
Trang 2May be a CA throughout Canada or a CGA in certain provinces
Accountant government agency, or other organization.
Trang 3Certified Management member of the Society of the Accountant (CGA) Management Accountants of
Canada
Trang 4Favorite Recreational Activity by Chief Financial Officers at Large Corporations
Trang 5
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Accounting Information Management
Lenders and suppliers
Trang 6Shareholders and potential investors
Government agencies
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The Users of Accounting Information
Federal CCRA Provincial Municipal Other
Regulatory Agencies
Provincial Securities Commissions Stock
exchanges Other agencies
Economic Planners
Federal Government Planners Bank of Canada
Prov. Govt.
planners
Other groups
Employees and labour unions Financial advisors Customers and the general public
Present or potential investors Present or potential creditors
Those with Indirect Financial Interest
Actions That Affect Business Activities
Business Activities Accounting
Trang 8liabilities
Trang 94. Preparing financial statements 3. Posting
transactions
2. Recording transactions
Trang 1014-8
Trang 11
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Mark’s Balance Sheet
14-9
Trang 13income Net
Assets income Net
Trang 14Receivables turnover = Inventory turnover =
14-12
s Receivable
Sales
Inventory Sales
Assets
Total
Sales
Trang 15assets Current
s liabilitie Current
Inventory
assets Current
Trang 16debt
Total
expense Interest
taxes
&
interest
before
Income
Trang 17ofNumber
incomeNet
goutstandin
shares
ofNumber
paid
dividends
Total
Trang 18a Describe the two basic accounting statements. What type of information does each provide that can help you evaluate the situation?
b Which of the financial ratios are likely to prove to be
of greatest value in identifying problem areas in the company? Why? Which of your company’s financial ratios might you expect to be especially poor?
c Discuss the limitations of ratio analysis
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Explore Your Career Options
What contributions do accountants make to organizations?
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Trang 20Additional Discussion Questions and Exercises
1 What is the accounting equation? Which financial statement
(income statement or balance sheet) is most similar to the accounting equation?
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Additional Discussion Questions and Exercises
4 How do public accountants, private accountants, and
certified public accountants differ?
5 What are some different types of liabilities?
14-18b