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| process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated to owners, managers, and other interested parties. |
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| accumulates data about a firm's financial affairs, classifies the data in a meaningful way, and summarizes it in periodic reports. |
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| work for public accounting firms |
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| The review of financial statements to assess their fairness and adherence to generally accepted accounting principles |
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| Management Advisor Services |
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| Involve helping clients improve their information systems or their business performance |
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| Managerial Accounting (Private Accounting) |
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Definition
working for a single business in industry - perform wide range of activities
establish accounting policies
providing financial advices to managment
manage the accounting system
prepare and interpret financial statements
prepare tax forms and do tax planning
prepare internal reports for management |
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Involves keeping financial records and preparing financial reports as part of the staff, or local governmental units
- Security and exchange commission (SEC)
- Internal Revenue Service (IRS)
- Federal Bureau of Investigation (FBI)
- Homeland Security
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| One or two accounting courses and little to no experience |
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| One to two years of accounting education and accounting clerk experience |
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| Bachelor's degree usually or possibly a two year college degree |
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| Tax compliance (preparation of tax returns and auditing those returns) - tax planning (giving advice to clients to reduce their tax liability) (Tax write-offs) |
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| independent accountant who provides accounting services to the public for a fee |
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| Suppliers use financial information to: |
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Definition
- assess the firm's ability to pay its bills
- set credit limit for the firm
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| Banks use financial information to: |
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- decide whether to make a loan
- determine the terms of the loan
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| tax authorities use financial info to determine the tax base for: |
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- income taxes
- sales taxes
- property taxes |
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| Regulatory Agencies and Investors |
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- the securities and exchange commission (SEC) is the federal agency that oversees the financial information of public corporations
- public corporations are those whose stock is traded on stock exchanges and over the counter markets |
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- led to major change in the regulatory environment
- act was purposed to crackdown on corporate fraud and corruption |
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| Customers use financial info to: |
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- economic health of business
- if the business is permanent or will stick around for maintenance or parts |
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| employees and unions use financial information to: |
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- negotiate wages and benefits
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| three major legal forms of business entity: |
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Definition
- Sole proprietorship
- partnership
- corporation |
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- business which is owned by one person who is legally responsible for debts and taxes
- will end when owner dies, can't pay, or closes |
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- owned by two or more people that are legally responsible for debts/taxes of business -ends when one or both partners leave
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- publicly or privately owned business entity separate from owners - legal right to own property and do business in its own name; stockholders not responsible for debt
- only ends if corp. becomes bankrupt
- thousands own
- stockholders vote to liquidate |
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issued in form of certificates - represent ownership of business
- wanted to buy low, sell high |
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| Separate entity assumption |
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| keep personal records separated from business records |
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| generally accepted accounting principles (GAAP) |
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| rules and regulations set up by professional accountants meant for everyone else |
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| independent accountant's review of a firm's statements |
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