PDF FINANCIAL ACCOUNTING - Sacramento State
FINANCIAL ACCOUNTING
Robert Libby Patricia A. Libby Daniel G. Short
Irwin/McGraw-Hill
? The McGraw-Hill Companies, Inc., 2001
Chapter 1
Financial Statements and
Business Decisions
Irwin/McGraw-Hill
? The McGraw-Hill Companies, Inc., 2001
The Objectives of Financial Accounting
Financial statements are the primary means of communicating financial information to parties outside the business organization.
Balance Sheet Income Statement
Irwin/McGraw-Hill
Stakeholders
? The McGraw-Hill Companies, Inc., 2001
Business Background
Business owners (called investors or stockholders) look for two sources of
possible gain:
Sell ownership interest in the future for more than they
paid.
Receive a portion of the company's earnings in cash (dividends).
Irwin/McGraw-Hill
? The McGraw-Hill Companies, Inc., 2001
Business Background
Creditors lend money to a company for a specific length of time and gain by
charging interest on the money loaned.
Loan
Irwin/McGraw-Hill
Interest
Dana's Diner
? The McGraw-Hill Companies, Inc., 2001
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