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Accounting is a system to – Accounting is a system to – MeasureMeasure Record &Record & ReportReport

Economic TransactionsEconomic TransactionsTo Users (both internal and To Users (both internal and

external)external)

What is Accounting?What is Accounting?What is Accounting?What is Accounting?

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Internal Users – individuals directly Internal Users – individuals directly involved in managing and operating involved in managing and operating an organization. an organization.

External Users – individuals not External Users – individuals not directly involved in running the directly involved in running the organization. organization.

Who uses Accounting Who uses Accounting Information?Information?

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InternalInternal Owner/OperatorsOwner/Operators ManagersManagers Employees?Employees? Directors?Directors?

ExternalExternal Bankers/creditorsBankers/creditors Investors and Investors and

potential investorspotential investors UnionsUnions External auditorsExternal auditors CRACRA SuppliersSuppliers CustomersCustomers

Users of Accounting Users of Accounting InformationInformation

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To make Decisions. To make Decisions.

Why do Users Need Why do Users Need Accounting Information?Accounting Information?

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Accounting OpportunitiesAccounting Opportunities

I will be able to get a job in - I will be able to get a job in -

Financial AccountingFinancial Accounting

Managerial AccountingManagerial Accounting

TaxationTaxation

Accounting-related fieldsAccounting-related fields

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Professional CertificationProfessional Certification

Professional certifications in Canada - Professional certifications in Canada - CurrentlyCurrently

Chartered Professional Accountant (CPA)Chartered Professional Accountant (CPA)

Prior to 2014Prior to 2014 Chartered Accountant (CA)Chartered Accountant (CA) Certified General Accountant (CGA)Certified General Accountant (CGA) Certified Management Accountant (CMA)Certified Management Accountant (CMA)

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Business Organization Business Organization

An organization that sells products or services for An organization that sells products or services for profit (to make money).profit (to make money).

Non-Business OrganizationNon-Business Organization

An organization that plans and operates not for An organization that plans and operates not for profit but rather for other goals. profit but rather for other goals.

Types of OrganizationsTypes of Organizations

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Business Organizations Business Organizations

Need to Need to measure, record and reportmeasure, record and report economic economic transactions to users for the purpose of transactions to users for the purpose of making decisionsmaking decisions to achieve the goals of the business organization. to achieve the goals of the business organization.

Non-Business OrganizationNon-Business Organization

Need to Need to measure, record and reportmeasure, record and report economic economic transactions to users for the purpose of transactions to users for the purpose of making decisionsmaking decisions to achieve the goals of the non-business organization. to achieve the goals of the non-business organization.

The Common Theme The Common Theme

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Sole ProprietorshipSole Proprietorship

PartnershipPartnership

CorporationCorporation

Forms of For Profit Forms of For Profit Business Organizations Business Organizations

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One ownerOne owner Separate entity for Separate entity for

accounting purposesaccounting purposes Not a separate legal Not a separate legal

entity from the ownerentity from the owner Unlimited liabilityUnlimited liability Limited lifeLimited life Owner taxed on Owner taxed on

profitsprofits

Sole ProprietorshipsSole Proprietorships

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Two or more ownersTwo or more owners Separate entity for Separate entity for

accounting purposesaccounting purposes Not a separate legal Not a separate legal

entity from the entity from the ownersowners

Unlimited liabilityUnlimited liability Limited lifeLimited life Owners taxed on Owners taxed on

profitsprofits

PartnershipsPartnerships

© 2007 McGraw-Hill Ryerson Ltd.

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One or more ownersOne or more owners Separate entity for Separate entity for

accounting purposesaccounting purposes Separate legal entity Separate legal entity

from the owner(s)from the owner(s) Limited liabilityLimited liability Unlimited lifeUnlimited life Corporation taxed Corporation taxed

on profitson profits

CorporationsCorporations

© 2007 McGraw-Hill Ryerson Ltd.

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Includes charities, not-for profit and Includes charities, not-for profit and

government organizations.government organizations.

Do not have identifiable owners. Do not have identifiable owners.

Form of Non-Business Form of Non-Business OrganizationsOrganizations

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What should be the characteristicsWhat should be the characteristics

of our financial accounting of our financial accounting information? information?

AccurateAccurate

RelevantRelevant

ReliableReliable

ComparableComparable

TimelyTimely

UnderstandableUnderstandable

The Quality of The Quality of Accounting InformationAccounting Information