BU387 Chapter Notes - Chapter 1: International Financial Reporting Standards, Financial Accounting Standards Board, Credit Rating Agency
Document Summary
Spectacular business failures (worldcom inc. , enron, arthur andersen) Capital market failures (subprime lending crisis, bank failures) Accounting is the identification, measurement, and communication of financial information about economic entities to interested persons. Financial accounting (financial reporting): preparation of financial reports that cover all of the e(cid:374)te(cid:396)p(cid:396)ise"s (cid:271)usi(cid:374)ess a(cid:272)ti(cid:448)ities a(cid:374)d a(cid:396)e used (cid:271)(cid:455) (cid:271)oth internal and external parties (investors, creditors, others) Managerial accounting: identifying, measuring, analyzing, and communicating financial information to internal decision makers. Cost (cid:271)e(cid:374)efit a(cid:374)al(cid:455)ses, fo(cid:396)e(cid:272)asts to pla(cid:374), e(cid:448)aluate, a(cid:374)d (cid:272)o(cid:374)t(cid:396)ol a(cid:374) o(cid:396)ga(cid:374)izatio(cid:374)"s operations. Financial statements: principal way of communicating financial information to outside enterprise fi(cid:396)(cid:373)"s histo(cid:396)(cid:455), (cid:395)ua(cid:374)tified i(cid:374) te(cid:396)(cid:373)s of (cid:373)o(cid:374)e(cid:455) Statement of cash flows (cash flow statement) Statement of changes in equity (statement of retained earnings) Note disclosures are important part of each financial statement. Information required by pronouncement of authority, regulatory rule, custom, or because management wants to disclose it voluntarily.
