Ch1 - Language of Business Flashcards
Two sub-classes of accounting
- Financial accounting
2. Managerial accounting
Two key missions of accounting
- Facilitate value creation by supporting decision-making.
2. Measure and report the amount of value created.
Definition of accounting
Accounting is an information system that measures (valuation), processes (records transactions), and communicates (reports) financial information about an enterprise.
List the financial statements
Balance sheet (also Statement of financial position)
Income statement (also Profit and loss account or P&L)
Statement of cash flows
Statement of changes in equity
Notes to financial statements
Who are internal users of financial statements?
Management
Employees
List some of the external users of financial statements
Investors (shareholders, potential investors, investment analysts)
Creditors (suppliers and lenders, including banks)
Government (tax authorities, regulatory agencies)
Customers
Competitors
General public