Technology-based companies like Intel operate in highly competitive markets and continuously introduce new products. Intel 's management discusses the company's business strategy in a recent annual report by explaining the importance of meeting the needs of its customers: "Our goal is to be the preeminent building block supplier to the worldwide Internet economy. Focusing on our core competencies in the design and manufacture of integrated circuits, as well as our expertise in digital computing and communications, we believe we are well positioned to drive the convergence of computing and communications through silicon integration. We focus on developing advanced technology solutions tailored to meet user requirements in specific settings, providing the features people want in their homes, at work and at play."
Modern-day historians indicate that we are rapidly moving from the industrial age, with an emphasis on heavy manufacturing, to the information age. Companies like Intel , Microsoft , Cisco Systems , and others are major players in this transformation of business. For information-age companies the factors of success are quite different than for industrial-age companies. Information-age companies rely more heavily on intellectual capital, research and development, and other intangibles that were less important for companies whose focus was heavy manufacturing or, even earlier in our history, primarily agricultural.
AFTER STUDYING THIS CHAPTER, YOU SHOULD BE ABLE TO:
Explain the nature and general purpose of financial statements. |
|
|
|
Explain certain accounting principles that are important for an understanding of financial statements and how professional judgment by accountants may affect the application of those principles. |
|
|
|
Demonstrate how certain business transactions affect the elements of the accounting equation: Assets Liabilities Owners' Equity. |
|
|
|
Explain how the statement of financial position, often referred to as the balance sheet, is an expansion of the basic accounting equation. |
|
|
|
Explain how the income statement reports an enterprise's financial performance for a period of time in terms of the relationship of revenues and expenses. |
|
|
|
Explain how the statement of cash flows presents the change in cash for a period of time in terms of the company's operating, investing, and financing activities. |
|
|
|
Explain important relationships among the statement of financial position, income statement, and statement of cash flows, and how these statements relate to each other. |
|
|
|
Explain common forms of business ownership—sole proprietorship, partnership, and corporation—and demonstrate how they differ in terms of their presentation in the statement of financial position. |
|
|
|
Discuss the importance of financial statements to a company and its investors and creditors and why management may take steps to improve the appearance of the company in its financial statements. |