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    The Basis For Business Decisions: Williams Haka Bettner Meigs

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    The Basis For Business Decisions: Williams Haka Bettner Meigs

    Uploaded by

    devansh kakkar
    919 views20 pages

    Original Title

    WHBM01

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    Copyright:

    © All Rights Reserved
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    Download as ppt, pdf, or txt
    919 views20 pages

    The Basis For Business Decisions: Williams Haka Bettner Meigs

    Uploaded by

    devansh kakkar

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
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    Financial & Managerial

    Accounting
    The Basis for Business Decisions

    TWELFTH EDITION

    Williams Haka Bettner Meigs


    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
    Chapter

    1 ACCOUNTING:
    Information for Decision Making

    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002


    The
    accounting
    process

    Accounting
    “links” decision
    makers with Accounting
    Economic
    economic
    activities information
    activities  and
    with the results of
    their decisions.

    Actions
    (decisions) Decision
    makers
    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
    Types of Accounting Information

    Financial Tax

    Managerial

    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002


    Information System

    Cost & Revenue


    Determination
    Information Job costing Decision Support
    Users Process costing CVP analysis
    Investors ABC Performance
    Creditors Sales evaluation
    Managers Assets & Incremental
    Owners Liabilities analysis
    Customers Plant and Budgeting
    Employees Capital
    equipment
    Regulatory Loans & equity allocation
    agencies Receivables, Earnings per
    -SEC payables & cash share
    -IRS Ratio analysis
    -EPA Cash Flows
    From
    operations
    McGraw-Hill/Irwin From financing © The McGraw-Hill Companies, Inc., 2002
    Basic Functions of an Accounting
    System
     Interpret
    and record
    business
    transactions.

    Payment

    Car

    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002


    Basic Functions of an Accounting
    System
     Interpret  Classify
    and record similar
    business transactions
    transactions. into useful  Summarize
    reports. and
    communicate
    information to
    decision
    makers.

    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002


    Objectives of External Financial
    Reporting
    The primary external users of financial information are
    investors and creditors.

    Cash Flow Prospects


    Investors Creditors
    Return on Periodic Periodic
    Investment dividends interest
    Sale of Repayment of
    Return of ownership at a loan at a
    Investment future date future date
    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
    (Specific)
    Information about economic
    Objectives
    resources, claims to resources, and
    changes in resources and claims. of
    Financial
    Reporting
    Information useful in assessing
    amount, timing and uncertainty of
    future cash flows.

    Information useful in making


    investment and credit decisions.
    (General)
    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
    Objectives of External Financial
    Reporting

    Balance Sheet

    Income Statement
    The primary
    Statement of Cash Flows
    financial
    statements.

    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002


    Financial Statements:
    A Lens to View Business i ng
    or t
    Rep
    c i al
    an
    Fin

    Financial
    Statements
    Fin
    anc
    ial R
    e por
    ting

    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002


    Characteristics of Externally
    Reported Information
    A Means to
    an End
    Usefulness Broader than
    Enhanced via Financial
    Explanation Statements

    Based on
    Historical in
    General Purpose
    Nature
    Assumption

    Results from Inexact and


    Approximate Measures
    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
    Internal Users of Accounting
    Information

     Board of Directors
     Chief Executive Officer
     Chief Financial Officer
     Vice Presidents
     Business Unit Managers
     Plant Managers
     Store Managers
     Line Supervisors

    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002


    T ypical S im ple O rg anizatio n C hart

    Board of
    Directors
    (Ow ners)

    Chief Executive
    Officer
    (CEO)

    Business Unit V.P. Hum an V.P. Information Chief Financial


    Manager Resources Services Officer (CFO)

    Plant Plant
    Manager Manager

    Plant Plant
    Accountant Accountant
    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
    Information about decision-making
    authority, for decision-making support, and Objectives
    for evaluating and rewarding decision-making of
    performance.
    Managerial
    Reporting
    Information useful in assessing
    both the past performance and future
    directions of the enterprise and information
    from external and internal sources.

    Information useful to help the enterprise


    achieve its goal, objectives and mission.

    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002


    Characteristics of Management
    Accounting Information

    Timeliness
    Identify
    A Means to Decision-
    an End Making
    Authority

    Measures of Oriented
    Efficiency and Toward
    Effectiveness Future

    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002


    Integrity of Accounting Information
    Institutional Features
    Generally Accepted Accounting Principles
    (GAAP)
    Financial Accounting Standards Board
    Securities and Exchange Commission
    Internal Control Structure
    Audits

    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002


    Integrity of Accounting Information
    Professional Organizations
    American Institute of Certified Public
    Accountants
    Institute of Management Accountants
    Institute of Internal Auditors
    American Accounting Association

    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002


    Integrity of Accounting Information
    Competence, Judgment and Ethical Behavior
    Certified Public Accountants (CPAs)
    Certificate in Management Accounting (CMA)
    Certificate in Internal Auditing (CIA)
    Code of Professional Conduct

    CP
    A
    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
    End of Chapter 1

    McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002

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