Chapter 1: Financial Statements and Business Decisions Summary

RSM 219 Cornerstone -

of financial Accounting
Financial Statement Result from
accounting process
→
↳
identifying measuring recording
,
,
and communicating informati
about 's
company business activity .




•
Financial statements are useful because
they assist different users

decision
in
answering questions and
making .




Management accounting
Internet Users : →
↳ Business Managers ( plan & make decision about 's
company
financial activities )
◦
petty ,
investing &

Employees ( Judge of the future
↳
the
prospect company ,
promoti
]
opportunities job security
,




External Users :



Investors :(Decide where to invest
↳
)
↳ Creditors ( tenders
money
( whether to loan to a )
↳ Government ( determine taxes owed
company
implement objectives
decisions )
,
regulatory ,




policy
make




Brook
keeping recording informatio
:


and
maintaining accounting
record .

, Objectives of information
according
:

ass :& decision makes in
aesessiy the amount
timing
→
,



and uncertainties of 's future cash flow
company
a .




4 of financial
types statement :




① Balance Sheet -
statement of financial position
② Income statement statement of
-


earnings
③ Statement of changes in retained
equity
-

earnings
statement
④ Cash flow source & use of cash
-
over a

period of time .




Forms of Business
Organizations
Sole Proprietorship
A sole
proprietorship is
unicorporeted business owned
by
'



an one
person . .




local businesses (restaurant
↳
usually smell in size ,
. _ .
_ .
]
↳
simple to set up
↳ Owner has full control rotating all profits for themselves
over business an .




→ Unlimited
liability responsible for debts of the business
-




↳ Limited business
continuity owner dies business over -

,