eLearning Session

1. The Function and Primary Purpose of Financial Accounting
   • There are a number of financial information supplier groups as well as several external user groups.

     Here is a summary. (39.0K)

   • The primary focus of financial accounting is on the information needs of investors and creditors.
   • Financial statements convey financial information to external users.
     1. Balance sheet (or statement of financial position)
     2. Income statement (or statement of operations)
     3. Statement of cash flows
     4. Statement of shareholders' equity

   Concept Check
   The primary focus of financial accounting is on the financial information provided by _____________________ companies to their present and potential _____________ and ________________.

   Concept Check
   The primary means of conveying financial information to investors, creditors, and other external users is through _________________________ and related _____________________.

2. The Economic Environment and Financial Reporting
   • The capital markets provide a mechanism to help our economy allocate resources efficiently.
   • Corporations, the dominant form of business organization in the United States, acquire capital from investors in exchange for ownership interest and by borrowing from creditors.
   • The investment-credit decision- A cash flow perspective
     1. A company will be able to provide a return to investors and creditors only if it can generate cash receipts from selling a product or service that exceed the cash disbursements necessary to provide that product or service.
     2. The objective of financial accounting is to provide information to investors and creditors to help them predict future cash flows.

   Concept Check
   The _____________________ and ____________________ or ___________ of that return are key variables in the investment decision.

   Concept Check
   Information should help investors and creditors evaluate the __________, __________, and ______________ of the enterprise's future cash receipts and disbursements.

   • Cash versus accrual accounting
     1. Over short periods of time, operating cash flow may not be an accurate predictor of future operating cash flows.
     2. The accrual accounting model provides a measure of periodic performance called net income.
     3. Net income is considered a better indicator of future operating cash flows than is current net operating cash flows. Illustration (34.0K)
3. The Development of Financial Accounting and Reporting Standards
   • Historical perspective and standards
     1. Generally accepted accounting principles (155.0K) (GAAP) are a set of guidelines companies follow in measuring and reporting financial information.
     2. The Securities and Exchange Commission (SEC) has the authority to set accounting standards for companies, but always has delegated the responsibility to the accounting profession. This article discusses the future of private-sector standard setting.
     3. The Financial Accounting Standards Board (FASB) currently sets accounting standards. Read about the perceptions of chief financial officers concerning the FASB in a CPA Journal article.

        Concept Check
        What are Generally Accepted Accounting Principles?

   • The development of accounting standards- A political process (44.0K)
     1. The FASB must consider potential economic consequences of accounting standards.
     2. The FASB undertakes a series of information gathering steps (181.0K) before issuing a substantive accounting standard. How timely is the FASB's standard-setting process?
     3. The International Accounting Standards Committee (IASC) was formed to alleviate the problem faced by multinational companies of having to comply with multiple sets of accounting standards. This CPA Journal article discusses the SEC's views on International Standards Setting Reform.
     4. Who will benefit from International Accounting Standards?
     5. Auditors offer credibility to financial statements by verifying that they are presented fairly in conformity with GAAP.
4. Purpose of the Conceptual Framework
   • The conceptual framework does not prescribe GAAP.
   • It provides an underlying foundation for accounting standards.
   • The framework consists of financial reporting objectives, qualitative characteristics of information, financial statement elements, recognition and measurement concepts, and constraints. Here is an overview. (189.0K)
5. Objectives of Financial Reporting
   • To provide information that is useful to present and potential investors and creditors.
   • Information is useful to investors and creditors if it helps them assess the amounts, timing, and uncertainty of prospective cash flows.
   • Useful cash flow information includes information about economic resources, the claims to those resources, and the effects of transactions, events, and circumstances that cause changes in resources and claims.
6. Qualitative Characteristics of Accounting Information. Here is an overview. (229.0K)
   • Overriding objective is decision usefulness.
   • Primary qualities of useful information are relevance and reliability.
   • Components of relevance are:
     1. Predictive value
     2. Feedback value
     3. Timeliness
   • Components of reliability are:
     1. Verifiability
     2. Neutrality
     3. Representational faithfulness
   • Secondary qualities are comparability and consistency.
   • Constraints are cost effectiveness and materiality.
7. Elements of Financial Statements. Here is a description of each of the elements. (275.0K)
   • Balance sheet elements:
     1. Assets
     2. Liabilities
     3. Equity
     4. Investments by owners
     5. Distributions to owners
   • Income statement elements:
     1. Revenues
     2. Gains
     3. Expenses
     4. Losses
     5. Comprehensive income
8. Recognition and Measurement Concepts. Here is an overview. (60.0K)
   • Recognition- an item should be recognized in the basic financial statements when it meets certain criteria.
   • Measurement
     1. The monetary unit used in financial statements is nominal units of money without any adjustment for changes in purchasing power.
     2. Different attributes are used to measure different financial statement elements.
   • There are important assumptions that underlie fundamental principles.
     1. Economic entity assumption
     2. Going concern assumption
     3. Periodicity assumption
     4. Monetary unit assumption
   • There are four broad accounting principles that guide accounting practice.
     1. Historical cost principle
     2. Realization Principle (37.0K)
     3. Matching principle 34. This Real-World, Real-Time Electronic Case addresses the matching principle as it relates to the treatment of promotional expenditures made by American Online.
     4. Full-disclosure principle
9. Ethics in Accounting
   • Ethics deal with the ability to distinguish right from wrong.
   • Many professions have articulated ethical standards in a code of ethics.
   • There are a number of steps (52.0K) that provide a framework for analyzing ethical issues.

This is a test òArte y cultura Literatura, Teatro, Museos Ciencia y tecnología Animales, Informática, Ingeniería Ciencias sociales Economía, Psicología Deportes y ocio Fútbol, Deportes, Turismo Economía y negocios B2B, Empleo, Finanzas Educación y formación Primarias, Universidades Espectáculos y diversión Cine, Actores, Música, ChÈvere Internet y computadoras Red mundial, Aplicaciones, Revistas Materiales de consulta Bibliotecas, Diccionarios Medios de comunicación Temas de Actualidad, PeriÛdicos, TV Política y gobierno Países, Derecho, Embajadas Salud Medicina, Enfermedades Sociedad Gastronomía, Culturas, Religión Zonas geográficas PaÌses, Regiones