Management and Organizational Studies 1023A/B Chapter Notes - Chapter 1: Financial Statement, Sole Proprietorship, Income Tax

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 1023A/B
• Professor: Maria Ferraro

Document Summary

Accounting is the information system that identifies and records the economic events of an organization, and then communicates them to a wide variety of interested users. Mos textbook notes chapter 1: the world"s economic system depends on highly transparent, reliable, accounting is called the (cid:498)language of business(cid:499) Internal users of accounting information plan, organize and run companies and accurate financial reporting. Internal users: incl. finance directors, marketing managers, hr, production supervisors and company officers. Production: which product line is the most profitable: to answer these, users need detailed, timely accounting information. Internal reports: ex. financial comparisons of operating alternatives, projected profits from new campaign, analysis of sale costs and forecasts of cash needs. Investors (shareholders) use accounting information to make decisions on whether to buy, hold, or sell their ownership interest. Lenders (creditors) use this information to evaluate the risk of lending money. Other creditors use it to decide whether or not to grant credit (sell on account)