Accounting Information System

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Accounting Information System
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Major Accounting Bodies

• American Institute of Certified Public
  Accountants
• Financial Accounting Standards Board
• Government Accounting Standards Board
• Securities and Exchange Commission

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Ethics

• The process that individuals use

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Ethics

• The process that individuals use to evaluate
  their conduct

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Ethics

• The process that individuals use to evaluate
  their conduct in light of moral principles and
  values

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Assets

• Anything of value held by an organization
• Assets have

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Assets

• Anything of value held by an organization
• Assets have
• Potential usefulness

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Assets

• Anything of value held by an organization
• Assets have
• Potential usefulness
• Future usefulness

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Assets

• Anything of value held by an organization
• Assets have
• Potential usefulness
• Future usefulness
• Economic Value

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Assets

• Cost principle
• Going-concern concept
• Objectivity principle
• Stable dollar concept

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Equities

• Claims against the total assets of an
  organization
• Liabilities
• Claims of nonowners
• Owner's Equity
• Claims of owners

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Retained Earnings

• Cumulative total of net income, net loss, and
  dividends since start of business

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Revenues

• Inflows of assets that result from performing
  services or selling goods
• Revenues are realized when
• the service is performed or

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Revenues

• Inflows of assets that result from performing
  services or selling goods
• Revenues are realized when
• the service is performed or
• the goods are delivered

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Expenses

• Outflows of assets or incurrence of liabilities
  while earning revenues
• A business incurrs expenses to earn revenues

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The Accounting Equation

• Things of Value Claims
• Assets Equities
• Assets Liabilities Owner's Equity
• Assets - Liabilities Net Assets

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Analyzing Transactions

• Use accounting equation
• Is there a change in assets?
• Which asset?
• How much was the change?
• Is there another change in assets?

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Analyzing Transactions

• Is there a change in liabilities?
• Which liability?
• How much was the change?
• Is there another change in liabilities?
• Is there a change in owners equity?
• How much was the change?

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Four Basic Financial Statements

• Income Statement
• Statement of Owners Equity
• Classified Balance Sheet
• Statement of Cash Flows

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Income Statement

• Reports changes in owners equity from operating
  activities
• Revenues - Expenses Net Income(Loss)

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Statement of Owners Equity

• Changes in owners interest in assets
• Issuances of new stock
• Retained earnings
• Net income or loss
• Dividends

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Classified Balance Sheet

• Classification - arrangement of financial
  statement items into groupings that have common
  basis
• Assets
• Current
• Property, plant, and equipment

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Classified Balance Sheet

• Liabilities
• Current
• Long-tern
• Owners Equity
• Common stock
• Retained earnings

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Statement of Cash Flows

• Reports cash flows during period
• Categories of activities
• Operating activities
• Investing activities
• Financing activities

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Analyzing Information
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Balance Sheet Analysis

• Are total assets higher or lower?
• What is percent change in total assets?
• Is the percent of total liabilities to total
  liabilities plus owners equity increasing or
  decreasing?

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Income Statement Analysis

• Are revenues higher or lower?
• What is the precentage change in total revenues?
• Is the percentage of total expenses to total
  revenues increasing or decreasing?

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Integrative Analysis

• Is the business operating efficiently by using
  the least amount of asset investment to generate
  a given level of total revenues?
• Calculate Total Asset Turnover
• Total revenues
• divided by
• Average total assets

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