MGT220H5 Chapter Notes - Chapter 1: Adverse Selection, Resource Allocation, Management Accounting
Document Summary
Accounting = identification, measurement and communication about financial information about economic entities to interested persons. Used by both internal and external users. External users include such decision makers as investors, creditors, unions, and government agencies. Process of identifying, measuring, analyzing and communicating financial information to internal decision makers info takes forms such as cost benefit analyses, forecases to plan, evaluate and control operations. Income statement income/comprehensive income: balance sheet statement of financial position, statement of cash flows, statement of shareholders" (owners") equity. [note disclosures: other forms of financial reporting include, news releases, management forecasts, etc. Info procided by accounting enables investors and creditors to compare income and assets of companies and assess relative risks and returns of different investment opportunities. Primary exchange mechanisms for allocating resources are debt and equity markets as well as financial institutions such as banks. Includes both internal and external parties: key stakeholders include: investors, creditors, auditors, regulators, analysts, management, standard setters, and others.
