Explaining Basic Accounting Concepts and Business Structures

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Explaining Basic Accounting Concepts and Business Structures Laurie D. Melvin ACC/537 – Financial Accounting May 9, 2011 James Neuner, MBA One of the most important decisions to make when one chooses to start a business is knowing the type of legal organizations to select because the decision affects many aspects of the business. What can be affected are the amount and type of paperwork required, tax payments, possible personal liability one may face, the ability to borrow money, legal obligations, and the business laws that have to be followed. Financial Accounting is a course that introduces basic concepts and methods of corporate financial statements that are most commonly…show more content…
Category D) – it knows to review the next or other categories that would address any accounting issues or concerns it may have. Effective Accounting Information Using the Qualities of Accounting Information “Accounting is the information system that identifies, records, and communicates the economic events of an organization to interested users” (Kimmel, Weygandt & Kieso, 2007, p. 6). The interested users are considered to be the internal users, who use the accounting information to manage, and operate a business – finance, production, operating and marketing officers – and the external users, who use the accounting information to make decisions on stock, for risk evaluation of extending credit and loans, and to see if the organization is complying with the tax laws – investors, creditors, consumers, and tax authorities. The internal and external users use the accounting information system to keep track on the various activities of a business – operating, investing, and financing – that is communicated through a business’ financial statements – balance sheet, income statement, retained earnings statement, and statement of cash flows. For organizations that are publicly traded in the United States, an annual report along with the management discussion and analysis (MD&A), notes to the financial statements, and an auditor’s report must be provided to
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