ACCT-201 Chapter Notes - Chapter Chapter 1: Accounting Period, Institute Of Internal Auditors, Retained Earnings
Document Summary
Accounting: provides information in answering questions about resource allocation. Market based allocation: market is a group of people or entities organized to exchange items of value. Resource agents make profits that go to the conversion agents that then provide goods and services to the consumers. In return the consumers make the conversion agents profit by buying the goods and services and that makes compensations for the resource agents. Common terms for the added value created in the transformation process: Financial resources: conversion agents need financial resources (money) to establish and operate their businesses. Three types of conversion agents: #1. Physical resources: are called natural resources: owners seek to sell in order to make higher pay and repeated sales. Labor resources: both intellectual and physical labor. Financial accounting: focuses on the needs of external users. Managerial accounting: focuses on the needs of internal users. Non-for-profit entities: organizations that are not motivated by profit.
