Financial

Financial Accounting
Accounting
Riaz H. Soomro

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The
accounting
process

Economic
activities

Actions
(decisions)
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Accounting
links decision
makers with
economic
activities and
with the results of
their decisions.

Accounting
information

Decision
makers

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Information
Information System
System

Information
Information
Users
Users
Investors
Investors
Creditors
Creditors
Managers
Managers
Owners
Owners
Customers
Customers
Employees
Employees
Regulators
Regulators
-SEC
-SEC
-IRS
-IRS
-FTC
-FTC
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Financial
Financial
Information
Information
Provided
Provided
Profitability
Profitability
Financial
Financial
position
position
Cash
Cashflows
flows

Decisions
Decisions
Supported
Supported
Performance
Performance
evaluations
evaluations
Stock
Stock
investments
investments
Tax
Taxstrategies
strategies
Labor
Laborrelations
relations
Resource
Resource
allocations
allocations
Lending
Lending
decisions
decisions
Borrowing
Borrowing

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Basic
Basic Functions
Functions of
of an
an Accounting
Accounting
System
System
Interpret
and record
business
transactions.

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Classify
similar
transactions
into useful
reports.

Summarize
and
communicate
information to
decision
makers.

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External
External Users
Users of
of Accounting
Accounting
Information
Information
Owners
Creditors
Potential investors
Labor unions
Governmental agencies
Suppliers
Customers
Trade associations
General public
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Objectives
Objectives of
of External
External Financial
Financial
Reporting
Reporting
Balance Sheet
Income Statement
Statement of Cash Flows

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The primary
financial
statements.

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Integrity
Integrity of
of Accounting
Accounting Information
Information
Institutional Features
Generally Accepted Accounting Principles (GAAP)
Financial Accounting Standards Board
International Accounting Standards Board
Securities and Exchange Commission
Public Company Accounting Oversight Board
Audits of Financial Statements
Legislation

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Integrity
Integrity of
of Accounting
Accounting Information
Information

Professional Organizations
American Institute of Certified Public Accountants
Institute of Cost and Management Accountants
Institute of Internal Auditors
American Accounting Association
Committee of Sponsoring Organizations of the
Tread way Commission (COSO)
Institute of Cost and Management Accountants of
Pakistan
Institute of Chartered Accountants
of Pakistan
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End
End of
of Chapter
Chapter 11

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