MANGMT 1010 1st Edition Lecture 7 Outline of Last Lecture I Definition of the Finance Function II What are securities A Security and exchange commission B Investment banks III Common stock A Investment traits of common stock IV What is a bond A Types of bonds V Making choices Outline of Current Lecture I What is accounting II Who uses accounting information III Accountants IV What is an audit V The accounting equation Current Lecture I II III What is accounting Accounting a comprehensive system for collecting analyzing and communicating financial information Bookkeeping the recording of transactions Accounting information system AIS An organized means by which is financial information is identified measured recorded and retained for use in accounting statements and management reports Who uses accounting information 1 Business Managers 2 Employees and Unions 3 Investors and Creditors 4 Tax Authorities 5 Government Regulatory Agencies Acountants Financial Versus Managerial Accounting Financial accounting system is concerned with external information users These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute IV V Managerial accounting system serves internal users Controller Person who manages all of a firm What is an Audit Systematic examination of a company s accounting system to determine whether its financial reports fairly represent its operations The accounting equation ASSETS LIABILITIES OWNERS EQUITY Assets any economic resource expected to benefit a firm or an individual who owns it Liability a debt owned by a firm to an outside organization or individual Owners equity the amount of money that owners would receive if they sold all of a firm s assets and paid all of its liabilities