Financial Accounting Libby Chapter 1 Notes Essay

4722 Words Mar 14th, 2014 19 Pages
Lesson 1: The Accounting Process
(Textbook Libby et al. Chapters 1 and 2).
When you have successfully completed this lesson, you will be able to...
Define accounting and explain its purpose
Define business and identify the different types of businesses
Explain the accounting equation: Assets = Liabilities + Owner's Equity
Visualize the start of a business, create accounting transactions for it, and prepare simple financial statements Reading Assignment
Please read chapters 1 and 2 of your textbook.
Recommended Problem Assignment
Chapter 1. Please complete MC questions plus Exercises 1-1, 1-3, 1-7, 1-8, 1-9 and 1-11
Chapter 2. Please complete MC questions plus Exercises 2-5, 2-7, 2-9, 2-12 and 2-13
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This introductory course focuses on financial accounting; therefore, we will focus on how managers report their operations to external parties.
Many outside users take an interest in how well a company is doing. External users may be investors, creditors, the government (IRS, federal, state, and local), and other interested parties like unions, consumer groups, and the general public (potential customers). Given all the interested parties and all the information that could be provided, the accounting profession formed a governing body to determine what, and how, accounting information should be reported and disclosed. The Financial Accounting Standards Board (FASB) is the private sector rule-making body that determines how accounting is practiced. CPAs (Certified Public Accountants) make sure that the rules set down by the FASB are being followed by the reporting businesses. International Financial Reporting Standards (IFRS) are also becoming important as U.S. Generally Accepted Accounting Principles (GAAP) is converging with International Reporting requirements. Although beyond the scope of this primer, more references will be made to International Reporting requirements as you progress further into the field of financial accounting.
Forms of Business Organization
Businesses usually fall into three major organizational types: proprietorships, partnerships, and corporations.
In a

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