ACC M115 Lecture Notes - Lecture 1: Financial Statement, Sole Proprietorship, Legal Personality
Document Summary
1st class: accounting defined and the nature of accounting. Accounting can be defined as an information system that produces financial reports. Accounting is the process of identifying, measuring, recording, and communicating economic events and activities to decision makers. Identifying involves selecting those events that are (1) considered evidence of economic activity, and (2) relevant to an enterprise. Next, economic events (transactions) must be measured in financial terms; a unit of. Measure- that is, quantified in dollars and cents. The recorded information is then communicated through the preparation and distribution of accounting reports called financial statements. Financial accounting is the field of accounting that focuses on providing information for external decision makers. External users are those users outside of the business. Directly interested: investors, bankers & suppliers judge the wisdom of their financial interests to a great extent, on the basis of accounting data. Indirectly interested: taxing authorities, regulatory agencies, labor unions, and economic planners.
