Paradigm College Accounting大学会计范式.pptVIP

Chapter 1 Paradigm College Accounting Chapter 1 The Nature of Accounting What Is Accounting? Definition: Accounting is the process of recording, summarizing, analyzing, and interpreting financial activities. Four Components of Accounting Recording—making written records of financial events Summarizing—combining written records into periodic reports Analyzing—examining reports to determine financial success or failure Interpreting—using the information in reports to make judgments and decisions Who Uses Accounting? Individuals—manage personal financial affairs Owners of Businesses—evaluate the results of business operations Managers of Businesses—make decisions about business operations Who Uses Accounting? Investors and Potential Investors— assess the financial condition of a current or possible future investment Banks and Other Lending Institutions—make decisions about providing or renewing loans Who Uses Accounting? Governments—manage their own financial affairs and to regulate some aspects of business Tax Authorities—check the accuracy of the tax records and returns prepared by businesses and individuals Types of Businesses The three basic forms of business organization: Sole Proprietorship Partnership Corporation All private businesses operate with the objective of earning a profit for their owners. Sole Proprietorship Owned by one person Receives all profits/incurs all losses Owner responsible for debts Partnership Owned by two or more people Divide profits and losses according to contract Partners responsible for debts Corporation Owned by investors called stockholders (or shareholders) Corporation receives all profits/incurs all losses Corporation (not investors) responsible for debt Types of Business Operations Service Businesses—provide a service to customers in order to earn a profit Dry cleaners, hair styling salons, practice of doctors Merchandising Businesses—buy goods from others and resell them to customers Department stores, su