Using Accounting Information

Using Accounting Information

1. Why AI is important?

   • Audit
     • Generally accepted accounting principles (GAAPs)
     • FASB
   • Sarbanes-Oxley Act of 2002
   • Who?
     • Managers
     • Lenders, suppliers, stockholders, potential investors and government agencies are other users

2. Types of Accounting

   • Managerial accounting
   • Financial accounting

3. Careers in Accounting

   • Private Accountant
   • Public Accountant
   • Certified Public Accountant (CPA)
   • Certified Management Accountant (CMA)

4. Accounting Process

   • Assets = Liabilities + Owners’ equity
   • Double-entry bookkeeping system
   • accounting cycle
     • Analyzing source documents
     • Recording transactions as they occur in the general journal
     • Posting transactions to accounts in the general ledger
     • Preparing the trial balance
     • Preparing financial statements

5. Balance Sheet

   • Assets
     • Fixed Assets
     • Intangible asset
   • Liabilities
     • Current liabilities
     • Long-term liabilities
   • Owners’ or stockholders’ equity
     • For sole proprietorships
       • Assets – liabilities
     • For partnerships
       • partner’s share of ownership is reported separately
     • For corporations
     • Retained earnings

6. Income Statement

   • summary of a firm’s revenues and expenses
   • Gross profit = A firm’s net sales less the cost of goods sold
   • Cost of goods sold
   • Operating expenses
   • Net income/loss

7. Statement of Cash Flows

   • how the operating, investing, and financing activities of a company affect cash

8. Comparing Data with Other Firms’ Data

   • Financial Ratio