Intermediate Accounting Ch. 1

Managerial Accounting - The process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, control, and evaluate a company's operations. Financial Accounting - The process that culminates in the preparation of financial reports on the enterprise for use by both internal and external parties. Users include investors, creditors, managers, unions, and government entities. Essential characteristics of accounting - (1) The identification, measurement, and communication of financial information about (2) economic entities to (3) interested parties. Objective of financial reporting - The objective of general-purpose financial reporting is to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in decisions about providing resources to the entity.