| After you have mastered the material in this chapter you will be able to: | 1a.
1b. | Explain the role of accounting in society. | | 2. | Distinguish among the different accounting entities involved in business events. | | 3. | Name and define the major elements of financial statements. | | 4. | Describe the relationships expressed in the accounting equation. | 5a.
5b. | Record business events in general ledger accounts organized under an accounting equation. | | 6. | Explain how the historical cost and reliability concepts affect amounts reported in financial statements. | | 7. | Classify business events as asset source, use, or exchange transactions. | | 8. | Use general ledger account information to prepare four financial statements. | | 9. | Record business events using a horizontal financial statements model. | | 10. | Explain the importance of ethics to the accounting profession. | | 11. | Identify three types of business organizations and some of the technical terms they use in their real world financial reports. |
CHAPTER OPENINGWhy should you study accounting? You should study accounting because it can help you succeed in business. Businesses use accounting to keep score. Imagine trying to play football without knowing how many points a touchdown is worth. Like sports, business is competitive. If you do not know how to keep score, you are not likely to succeed. AccountingService-based profession that provides reliable and relevant financial information useful in making decisions. is an information system that reports on the economic activities and financial condition of a business or other organization. Do not underestimate the importance of accounting information. If you had information that enabled you to predict business success, you could become a very wealthy Wall Street investor. Communicating economic information is so important that accounting is frequently called the language of business.  <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0072846003/edm46003_fm_p0101.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (K)</a>]]>
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The Curious Accountant | Who owns McDonald’s? Who owns the American Red Cross (ARC)? Many people and organizations other than owners are interested in the operations of McDonald’s and the ARC. These parties are called stakeholders. Among others, they include lenders, employees, suppliers, customers, benefactors, research institutions, local governments, flood victims, lawyers, bankers, financial analysts, and government agencies such as the Internal Revenue Service and the Securities and Exchange Commission. Organizations communicate information to stakeholders through financial reports. How do you think the financial reports of McDonald’s differ from those of the ARC? (Answer on page 9.) |
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