12: The Role of Accounting in Business
- Page ID
- 3966
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\(\newcommand{\avec}{\mathbf a}\) \(\newcommand{\bvec}{\mathbf b}\) \(\newcommand{\cvec}{\mathbf c}\) \(\newcommand{\dvec}{\mathbf d}\) \(\newcommand{\dtil}{\widetilde{\mathbf d}}\) \(\newcommand{\evec}{\mathbf e}\) \(\newcommand{\fvec}{\mathbf f}\) \(\newcommand{\nvec}{\mathbf n}\) \(\newcommand{\pvec}{\mathbf p}\) \(\newcommand{\qvec}{\mathbf q}\) \(\newcommand{\svec}{\mathbf s}\) \(\newcommand{\tvec}{\mathbf t}\) \(\newcommand{\uvec}{\mathbf u}\) \(\newcommand{\vvec}{\mathbf v}\) \(\newcommand{\wvec}{\mathbf w}\) \(\newcommand{\xvec}{\mathbf x}\) \(\newcommand{\yvec}{\mathbf y}\) \(\newcommand{\zvec}{\mathbf z}\) \(\newcommand{\rvec}{\mathbf r}\) \(\newcommand{\mvec}{\mathbf m}\) \(\newcommand{\zerovec}{\mathbf 0}\) \(\newcommand{\onevec}{\mathbf 1}\) \(\newcommand{\real}{\mathbb R}\) \(\newcommand{\twovec}[2]{\left[\begin{array}{r}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\ctwovec}[2]{\left[\begin{array}{c}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\threevec}[3]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\cthreevec}[3]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\fourvec}[4]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\cfourvec}[4]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\fivevec}[5]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\cfivevec}[5]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\mattwo}[4]{\left[\begin{array}{rr}#1 \amp #2 \\ #3 \amp #4 \\ \end{array}\right]}\) \(\newcommand{\laspan}[1]{\text{Span}\{#1\}}\) \(\newcommand{\bcal}{\cal B}\) \(\newcommand{\ccal}{\cal C}\) \(\newcommand{\scal}{\cal S}\) \(\newcommand{\wcal}{\cal W}\) \(\newcommand{\ecal}{\cal E}\) \(\newcommand{\coords}[2]{\left\{#1\right\}_{#2}}\) \(\newcommand{\gray}[1]{\color{gray}{#1}}\) \(\newcommand{\lgray}[1]{\color{lightgray}{#1}}\) \(\newcommand{\rank}{\operatorname{rank}}\) \(\newcommand{\row}{\text{Row}}\) \(\newcommand{\col}{\text{Col}}\) \(\renewcommand{\row}{\text{Row}}\) \(\newcommand{\nul}{\text{Nul}}\) \(\newcommand{\var}{\text{Var}}\) \(\newcommand{\corr}{\text{corr}}\) \(\newcommand{\len}[1]{\left|#1\right|}\) \(\newcommand{\bbar}{\overline{\bvec}}\) \(\newcommand{\bhat}{\widehat{\bvec}}\) \(\newcommand{\bperp}{\bvec^\perp}\) \(\newcommand{\xhat}{\widehat{\xvec}}\) \(\newcommand{\vhat}{\widehat{\vvec}}\) \(\newcommand{\uhat}{\widehat{\uvec}}\) \(\newcommand{\what}{\widehat{\wvec}}\) \(\newcommand{\Sighat}{\widehat{\Sigma}}\) \(\newcommand{\lt}{<}\) \(\newcommand{\gt}{>}\) \(\newcommand{\amp}{&}\) \(\definecolor{fillinmathshade}{gray}{0.9}\)- 12.1: The Role of Accounting
- This page defines accounting as measuring, summarizing, and communicating business activities to aid stakeholder decisions. It distinguishes between managerial accounting for management’s tailored needs and financial accounting for standardized performance reporting. The importance of adhering to accounting standards like GAAP and IFRS is highlighted to ensure accuracy and comparability in financial reporting.
- 12.2: Understanding Financial Statements
- This page emphasizes the importance of understanding financial statements for business owners and executives, illustrated through a fictional entrepreneur, Connie, who is considering expanding her home business. It also includes a college student planning to start a small business selling "Stress-Buster Play Packs," detailing the relevant costs of product sourcing, table rental, labor, and advertising, highlighting the financial management required in small-scale entrepreneurship.
- 12.3: Accrual Accounting
- This page outlines accrual accounting, emphasizing its distinction from cash-basis accounting through the timing of transaction recordings. It covers aspects like accounts receivable, accounts payable, inventory management, and long-term assets. The page also presents a hypothetical retail business, "The College Shop," which sells products to students, demonstrating how accounting principles apply in a practical business scenario.
- 12.4: Financial Statement Analysis
- This page discusses evaluating company performance through financial statements and ratio analysis, using "The College Shop" as an example. It highlights how comparing income statements over different years can provide insights into financial health, noting an increase in sales but a decrease in profits due to rising costs. This illustrates the importance of analyzing financial data to understand discrepancies and formulate questions for further examination.
- 12.5: The Profession- Ethics and Opportunities
- This page underscores the significance of ethical behavior in accounting, highlighting the severe implications of falsifying financial statements and referencing historical scandals like Enron and WorldCom. It addresses the necessity of accurate reporting, as mandated by the Sarbanes-Oxley Act, and outlines ethical standards set by the AICPA. The roles of public and private accountants are clarified, emphasizing their contributions to financial integrity and public trust.
- 12.6: Cases and Problems
- This page examines the competitive landscape of U.S. discount retailers, focusing on Wal-Mart's rise and the merger of Kmart and Sears. It emphasizes analyzing sales performance and market dynamics while discussing career opportunities in accounting and ethical dilemmas in financial reporting. Additionally, it details a report on shoe production costs across countries, assessing profit margins, potential shifts to U.S. production, and the implications of these changes for stakeholders.