Bus - A100- The Accounting System and Decision Makers Notes

BUS-A 100
INTRODUCTION TO
ACCOUNTING
The Accounting System and Decision Makers
Accounting System
• Financial Accounting Reports - Periodic financial statements and related dissolutions
o External Decision Makers

Ways to finance your business
Equity investors
• owners for a corporation - stockers who hope to receive dividends and for stock price to
increase, but no guarantee
• Public versus private company
Debt investors
• Creditors of the business - principal must be repaid with interest

(1934) Securities and Exchange Commission (SEC)
• Public companies must file:
o Form 10-K (annually) - Annual financial statements audited by an “independent
auditor” who verifies transactions and makes sure they follow generally accepted
accounting principles (GAAP)
▪ Independent Auditors
▪ Independent of the company they are auditing
▪ Examine the financial statements that management prepared
▪ Issues their opinion of their financial statements to give assurance
to stockholders, creditors and any other interested parties
▪ Generally Accepted Accounting Principles (GAAP)
▪ The accounting standards that companies based in the USA are
required to use
▪ Standards give the statements credibility and allow reports of
different companies to be comparable
▪ The responsibility of the Financial Accounting Standards Board
(FASB)
▪ International Financial Reporting Standards (IFRS)
▪ Accounting standards used in more than 100 other counters
▪ Responsibility of the International Accounting Standards Board
(IASB)
o Form 10-Q (quarterly)