Accounting Research Chapter 1
Chapter Overview
CHAPTER 1 Accounting and the Business Environment
The chapter begins with an explanation of the term “accounting” and its importance to the business world. The text discusses how accounting information is needed by various decision makers—individuals, businesses, investors, creditors, government regulatory agencies, taxing authorities, non-profit organizations, and others. Financial and management accounting are compared. A brief history of accounting and the role of ethics in accounting are presented. Students learn about accounting organizations and the three main accounting designations in Canada—CA, CGA, and CMA—and why each body, as well as individual businesses, have standards of conduct for their members and employees. The proprietorship, partnership, and corporate forms of business are briefly described. Generally accepted accounting principles (GAAP) are introduced and the economic-entity assumption, the reliability characteristic, the cost principle of measurement, the going-concern assumption, and the stable-monetary-unit assumption are explained. The next section of the chapter introduces the accounting equation for a proprietorship: Assets = Liabilities + Owner’s Equity. Each element of the equation is defined. The proprietorship form of business organization is the focus of the remainder of the chapter. Examples of a variety of transactions are analyzed and their impact on the accounting equation is discussed. The financial statements—income statement, statement of owner’s equity, balance sheet, and cash flow statement are illustrated. The interrelationship of the financial statements is emphasized. Chapter 1 ends with an introduction to international financial reporting standards (IFRS) and an explanation of how IFRS will be presented in the other chapters.
DID YOU GET IT? questions appear at the end of each Learning Objective to test your understanding of the Learning Objective just completed. The answers appear on
CHAPTER 1 Accounting and the Business Environment
The chapter begins with an explanation of the term “accounting” and its importance to the business world. The text discusses how accounting information is needed by various decision makers—individuals, businesses, investors, creditors, government regulatory agencies, taxing authorities, non-profit organizations, and others. Financial and management accounting are compared. A brief history of accounting and the role of ethics in accounting are presented. Students learn about accounting organizations and the three main accounting designations in Canada—CA, CGA, and CMA—and why each body, as well as individual businesses, have standards of conduct for their members and employees. The proprietorship, partnership, and corporate forms of business are briefly described. Generally accepted accounting principles (GAAP) are introduced and the economic-entity assumption, the reliability characteristic, the cost principle of measurement, the going-concern assumption, and the stable-monetary-unit assumption are explained. The next section of the chapter introduces the accounting equation for a proprietorship: Assets = Liabilities + Owner’s Equity. Each element of the equation is defined. The proprietorship form of business organization is the focus of the remainder of the chapter. Examples of a variety of transactions are analyzed and their impact on the accounting equation is discussed. The financial statements—income statement, statement of owner’s equity, balance sheet, and cash flow statement are illustrated. The interrelationship of the financial statements is emphasized. Chapter 1 ends with an introduction to international financial reporting standards (IFRS) and an explanation of how IFRS will be presented in the other chapters.
DID YOU GET IT? questions appear at the end of each Learning Objective to test your understanding of the Learning Objective just completed. The answers appear on