Chapter 1Accounting in Action

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The Navigator is a learning system designed to prompt you to use the learning aids in the chapter and set priorities as you study.

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Learning Objectives give you a framework for learning the specific concepts covered in the chapter.

Learning Objectives

After studying this chapter, you should be able to:

1 Explain what accounting is.

2 Identify the users and uses of accounting.

3 Understand why ethics is a fundamental business concept.

4 Explain accounting standards and the measurement principles.

5 Explain the monetary unit assumption and the economic entity assumption.

6 State the accounting equation, and define its components.

7 Analyze the effects of business transactions on the accounting equation.

8 Understand the four financial statements and how they are prepared.

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Feature Story

Knowing the Numbers

Many students who take this course do not plan to be accountants. If you are in that group, you might be thinking, “If I'm not going to be an accountant, why do I need to know accounting?” In response, consider the quote from Harold Geneen, the former chairman of a major international company: “To be good at your business, you have to know the numbers—cold.” ...

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