Chapter 17 – Understanding Accounting and Financial Information
17-1
Understanding Ac-
counting and Finan-
cial Information
chapter
=
what’s new in this edition 17.3
brief chapter outline and learning goals 17.3
lecture outline and lecture notes 17.5
PowerPoint slide notes 17.49
lecture links 17.69
lecture link 17-1: INNOVATING WITH OPEN BOOKS AND SHARED PROFITS 17.70
lecture link 17-2: MANAGERIAL ACCOUNTING AND THE BUDGET PROCESS 17.71
lecture link 17-3: COMING SOON—THE WIDE WORLD OF ACCOUNTING 17.71
lecture link 17-4: NEW REGULATIONS HIT WALL STREET 17.72
lecture link 17-5: THE POWER OF THE INTERNAL AUDITOR 17.73
lecture link 17-6: WHERE THE JOBS WILL BE 17.73
lecture link 17-7: FINDING A FRIENDLY FACTOR 17.74
lecture link 17-8: WHEN IS A SALE A SALE? 17.75
lecture link 17-9: USING THE STATEMENT OF CASH FLOWS 17.75
17
Chapter 17 – Understanding Accounting and Financial Information
17-2
lecture link 17–10: STAYING ALIVE IN TOUGH ECONOMIC TIMES 17.77
lecture link 17-11: USING YOUR COMPUTER IN SMALL-BUSINESS 17.77
ACCOUNTING
critical thinking exercises 17.78
Chapter 17 – Understanding Accounting and Financial Information
17-3
deletions from the 9th edition:
• Getting to Know Sean Perich of Bakery Barn
• Name That Company: Arthur Andersen
• Legal Briefcase
• Making Ethical Decisions
• Reaching Beyond Our Borders
brief chapter outline
and learning goals
c h a p t e r 17
Understanding Accounting and
Financial Information
Getting To Know SIGGI HILMARSSON of SIGGI’S YOGURT
learning goal 1
Demonstrate the role that accounting and financial information play for a business and for its
stakeholders.
I. THE ROLE OF ACCOUNTING INFORMATION
A. What Is Accounting?
Chapter 17 – Understanding Accounting and Financial Information
17-4
learning goal 3
List the steps in the accounting cycle, distinguish between accounting and bookkeeping, and
explain how computers are used in accounting.
Chapter 17 – Understanding Accounting and Financial Information
Getting to Know SIGGI HILMARSSON of SIGGI’S YOGURT
He took a job with Deloitte after leaving Iceland for college at Columbia. Adjusting to
American life proved to be difficult for Siggi and he missed some of his favorite foods, like
skyr. After perfecting his recipe, financing came from one of his professors from Columbia and
3. To run a business effectively you need to be able
to read, understand, and analyze accounting re-
4. Accounting reports and financial statements are
PPT 17-1
Chapter Title
PPT 17-2
Learning Goals
(See complete PowerPoint slide notes on page 17.49.)
PPT 17-3
Learning Goals
(See complete PowerPoint slide notes on page 17.49.)
PPT 17-4
Siggi Hilmarsson
(See complete PowerPoint slide notes on page 17.50.)
PPT 17-5
Name That Company
(See complete PowerPoint slide notes on page 17.50.)
lecture link 17-1
INNOVATING WITH OPEN
BOOKS AND SHARED PROFITS
A little investment can go a long way to improving effi-
ciency and profit margins. This is sometimes forgotten during
recessions. (See the complete lecture link on page 17.69 in this
manual.)
Chapter 17 – Understanding Accounting and Financial Information
pulse rate and blood pressure reports are in re-
vealing the health of a person.
B. WHAT IS ACCOUNTING?
1. ACCOUNTING is the recording, classifying,
summarizing, and interpreting of financial events
and transactions to provide management and
other interested parties with the information they
need to make good decisions.
b. To report financial information to PEOPLE
PPT 17-6
What’s Accounting?
(See complete PowerPoint slide notes on page 17.50.)
TEXT FIGURE 17.1
The Accounting System
(Text page 465)
PPT 17-7
The Accounting System
(See complete PowerPoint slide notes on page 17.51.)
TEXT FIGURE 17.2
Users of Accounting Information
and the Required Reports
(Text page 465)
This text figure shows the various users of accounting in-
formation and the types of reports used to report to them.
PPT 17-8
Accountants’ Responsibilities
(See complete PowerPoint slide notes on page 17.51.)
Chapter 17 – Understanding Accounting and Financial Information
nancial information about nonprofit organizations.
2. Five key areas of the accounting profession are:
cision making.
Chapter 17 – Understanding Accounting and Financial Information
PPT 17-9
Managerial Accounting
(See complete PowerPoint slide notes on page 17.52.)
lecture link 17-2
MANAGERIAL ACCOUNTING
AND THE BUDGET PROCESS
In addition to the balance sheet, income statement, and cash
flow statement, managers need other forms of financial infor-
mation, especially information for budgeting and cost account-
ing. (See the complete lecture link on page 17.70 in this man-
ual.)
PPT 17-10
Users of Accounting Information
(See complete PowerPoint slide notes on page 17.52.)
PPT 17-11
Financial Accounting
(See complete PowerPoint slide notes on page 17.53.)
critical thinking
exercise 17-1
ANNUAL REPORTS ONLINE
This exercise asks the students to explore the annual report
of a specific company by visiting the company’s website. (See
complete exercise on page 17.78 of this manual.)
PPT 17-12
How to Read an Annual Report
(See complete PowerPoint slide notes on page 17.53.)
PPT 17-13
Public versus Private Accountants
(See complete PowerPoint slide notes on page 17.54.)
4. Professional accounting assures users of finan-
cial information that financial reports of organiza-
17–14
lecture link 17-3
COMING SOON—THE WIDE
WORLD OF ACCOUNTING
Accounting standards may be going global in a big way.
(See the complete lecture link on page 17.71 in this manual.)
PPT 17-14
Ways to Improve Accounting
Practices
(See complete PowerPoint slide notes on page 17.55.)
TEXT FIGURE 17.3
Key Provisions of the
Sarbanes-Oxley Act
(Text page 467)
The passage of the Sarbanes-Oxley Act was a landmark an-
tifraud law, long overdue. However, one section of the law has
caused problems for companies.
Chapter 17 – Understanding Accounting and Financial Information
8. The recent financial crisis led to the DODD-
FRANK WALL STREET REFORM AND
CONSUMER PROTECTION ACT.
auditing and consulting have been instated.
Chapter 17 – Understanding Accounting and Financial Information
lecture link 17-4
NEW REGULATIONS HIT WALL
STREET
President Obama signed the Dodd-Frank Act into law. This
new legislation should have dramatic effects on the future of
American commerce. (See the complete lecture link on page
17.72 of this manual.)
PPT 17-15
The Dodd-Frank Act
(See complete PowerPoint slide notes on page 17.56.)
lecture link 17-5
THE POWER OF THE INTERNAL
AUDITOR
The largest bankruptcy in U.S. history started with an inter-
nal auditor following an unexplained piece of financial infor-
mation. (See complete lecture link on page 17.73 of this man-
ual.)
PPT 17-16
Auditing Checks Accuracy
(See complete PowerPoint slide notes on page 17.57.)
legal
briefcase
(Text page 468)
PPT 17–17
Fighting
Accounting Fraud
Line-by-Line
(See complete PowerPoint slide notes on page 17.57.)
2. A TAX ACCOUNTANT is an accountant trained
in tax law and responsible for preparing tax re-
3. As the burden of taxes grows, the role of the tax
accountant becomes more important.
1. GOVERNMENT AND NOT-FOR-PROFIT AC-
cording to a duly approved budget.
2. Users of government accounting information,
3. Governmental standards are set by the Govern-
growing need for trained accountants since con-
tributors want to see exactly how and where the
funds are being spent.
Chapter 17 – Understanding Accounting and Financial Information
lecture link 17-6
WHERE THE JOBS WILL BE
During the recent recession, millions of jobs disappeared.
However, one sector that may have a bright future is account-
ing. (See the complete lecture link on page 17.73 of this man-
ual.)
PPT 17-18
Specialized Accountants
(See complete PowerPoint slide notes on page 17.57.)
progress
assessment
(Text page 469)
PPT 17-19
Progress Assessment
(See complete PowerPoint slide notes on page 17.58.)
1. BOOKKEEPING is the recording of business
transactions.
a. Accounting goes far beyond the mere record-
a. In DOUBLE-ENTRY BOOKKEEPING, two
Chapter 17 – Understanding Accounting and Financial Information
TEXT FIGURE 17.4
Steps in the Accounting Cycle
(Text page 470)
PPT 17-20
The Accounting Cycle
(See complete PowerPoint slide notes on page 17.58.)
PPT 17-21
Bookkeeper’s Role
(See complete PowerPoint slide notes on page 17.59.)
PPT 17-22
Bookkeeper’s Tools
(See complete PowerPoint slide notes on page 17.59.)