ACC100 Introduction to Accounting
ACC100
Chapter 1 – Introduction to Accounting
Week 1 Notes
What is a business?
- “The activity of making or buying or selling goods or providing services in exchange for money”
What are goods?
- g. Nike shoes or BMW (physical items/tangible products)
What are Services?
- g. Netflix or yoga class or music concert
- Some companies sell BOTH goods and services
- g. Rogers/Bell – you can buy an iPhone (=goods) and a data plan (=service)
3 Business Sectors:
- Primary = grows/gathers raw materials from natural resources
- g. mining, fishing, farming
- Secondary = turns raw materials into products
- g. breweries, car manufacturers, clothing makers
- Tertiary = provide services to the general population/other businesses
- g. Canadian Tires, McDonalds, Uber
Who cares about a business and why?
- Stake Holders = individuals/groups who have objectives – they want something from their relationship with a business
- g. a customer wants to buy a good product from a business
- Stakeholders can be internal (they work for the company) or external (they are outside the business)
- g. the CEO of Coca Cola is an internal stakeholder who wants to keep his/her job and see the company successful and the bank is an external stakeholder who wants the company to repay loans
- Stakeholders make decisions to help them meet their objectives
Accounting system = information system that collects, tracks, and communicates business transactions with stakeholders use to make decisions to meet their objectives.
What are transactions?
- In simple terms… STUFF that happens in a business. E.g. You sell a BMW… you get $$$...pay your employees…you need to record these things, so you know they happened and at what $$$.
- Everything that you record has 2 aspects to it: something you give and something you get. Give BMW. Get $$$.
Stakeholders want financial info (about transactions) to be good, up-to-date, truthful, easy to understand… We call these qualities that stakeholders want financial information to have “the qualitative characteristics”
- The 6 qualities are: faithful (info is truthful!), relevant (info is useful for decision making), comparable (can compare to other businesses or the same business over time), verifiable (other people would determine the same $ amounts), timely (info is provided quickly) and understandable (info is clear/concise)
