Accounting Chapter 1 Notes
Chapter 1 – Introduction to Financial Accounting
Learning Objectives:
After studying Chapter 1, you should be able to * Discuss the different classifications of financial transactions * Define an equity investor and a debt investor and understand the difference * Discuss the role of the Securities and Exchange Commission * Name the Big Four accounting firms and define the term “independent auditor” * Define corporate governance * Discuss GAAP and IFRS and the concept of rules-based versus principles-based * Discuss the roles of the board of directors and the audit committee * Discuss the basics of Sarbanes-Oxley * -------------------------------------------------
Discuss how legal liability and corporate ethics work to help strengthen corporate governance * -------------------------------------------------
Define the words in bold in this chapter
“Accounting” is the recording of business transactions and the preparation of reports summarizing these transactions. These reports are called “financial statements”, and they are available to be read by anyone who might be interested, either inside or outside the company. Because the information in the financial statements is often the basis for decisions by analysts outside the company, it is important that the statements be prepared impartially, objectively, and in accordance with established standards. The term “financial accounting” refers specifically to the records and related reports that are available to be read by people outside of the company.
We will take an overview approach to financial accounting in this course. Accounting is based on debits and credits, but we will not have time to cover these in this course. You will learn about debits and credits and the basics of an accounting system when you take the first Principles of Accounting course. Instead, the approach used in this course is an overview called “impact on the financial statements”. It is a
Learning Objectives:
After studying Chapter 1, you should be able to * Discuss the different classifications of financial transactions * Define an equity investor and a debt investor and understand the difference * Discuss the role of the Securities and Exchange Commission * Name the Big Four accounting firms and define the term “independent auditor” * Define corporate governance * Discuss GAAP and IFRS and the concept of rules-based versus principles-based * Discuss the roles of the board of directors and the audit committee * Discuss the basics of Sarbanes-Oxley * -------------------------------------------------
Discuss how legal liability and corporate ethics work to help strengthen corporate governance * -------------------------------------------------
Define the words in bold in this chapter
“Accounting” is the recording of business transactions and the preparation of reports summarizing these transactions. These reports are called “financial statements”, and they are available to be read by anyone who might be interested, either inside or outside the company. Because the information in the financial statements is often the basis for decisions by analysts outside the company, it is important that the statements be prepared impartially, objectively, and in accordance with established standards. The term “financial accounting” refers specifically to the records and related reports that are available to be read by people outside of the company.
We will take an overview approach to financial accounting in this course. Accounting is based on debits and credits, but we will not have time to cover these in this course. You will learn about debits and credits and the basics of an accounting system when you take the first Principles of Accounting course. Instead, the approach used in this course is an overview called “impact on the financial statements”. It is a