Chapter 1: Introduction to Financial Accounting

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Henry Dauderis and David Annand
Athabasca University via Lyryx Learning

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Chapter 1 Learning Objectives

LO1 – Define accounting.
LO2 – Identify and describe the forms of business organization.
LO3 – Identify and explain the Generally Accepted Accounting Principles (GAAP).
LO4 – Identify, explain, and prepare the financial statements.
LO5 – Analyze transactions by using the accounting equation.

Accounting involves a process of collecting, recording, and reporting a business's economic activities to users. It is often called the language of business because it uses a unique vocabulary to communicate information to decision makers. To understand accounting, we first look at the basic forms of business organizations. The concepts and principles that provide the foundation for financial accounting are then discussed. With an emphasis on the corporate form of business organization, we will examine how we communicate to users of financial information using financial statements. Finally, we will review how financial transactions are analyzed and then reported on financial statements.