/ News & Press / Video / Financial Accounting Standards _ Intermediate Accounting _ CPA Exam FAR _ Chp 1 p 1
Financial Accounting Standards _ Intermediate Accounting _ CPA Exam FAR _ Chp 1 p 1
WEBVTT Kind: captions Language: en
00:00:01.200 hello and welcome to the session this is 00:00:03.65900:00:03.669 Professor for hat and this session would 00:00:05.37000:00:05.380 look at the major financial statements 00:00:08.33900:00:08.349 as well as other basic concepts and 00:00:11.33900:00:11.349 discovered in this chapter so the first 00:00:13.58900:00:13.599 topic would then look at as identify the 00:00:16.08000:00:16.090 major financial statements and other 00:00:17.97000:00:17.980 means of financial reporting so what are 00:00:22.58900:00:22.599 the essential characteristic of 00:00:24.17900:00:24.189 accounting so what is the purpose of 00:00:25.49900:00:25.509 accounting and how do we accomplish this 00:00:27.26900:00:27.279 goal the essential characteristics of 00:00:30.92900:00:30.939 accounting are identifying measuring and 00:00:34.50000:00:34.510 communicating financial information what 00:00:37.38000:00:37.390 does that mean 00:00:38.29900:00:38.309 identifying means basically figuring out 00:00:46.22000:00:46.230 which statements which activities are in 00:00:50.25000:00:50.260 that statement we need to observe okay 00:00:58.68000:00:58.690 then the second thing we need to do is 00:01:00.66000:01:00.670 we need to measure measure means somehow 00:01:02.79000:01:02.800 put a dollar amount and record so first 00:01:06.71900:01:06.729 way to know what is the activity what is 00:01:09.14900:01:09.159 the activity figuring out identifying 00:01:11.73000:01:11.740 the activity then we need to measure the 00:01:14.10000:01:14.110 activity then we need to communicate the 00:01:17.84000:01:17.850 activity the information to someone okay 00:01:21.42000:01:21.430 now let's give let's give you some 00:01:25.56000:01:25.570 example for example the company made a 00:01:27.17900:01:27.189 sale that's an activity that's a 00:01:31.13900:01:31.149 financial activity the company made a 00:01:33.81000:01:33.820 purchase 00:01:35.57000:01:35.580 that's an activity the company borrowed 00:01:40.13000:01:40.140 money that's an activity so all of these 00:01:45.02000:01:45.030 are activities that need to be 00:01:47.09000:01:47.100 identified measured put a dollar amount 00:01:49.88000:01:49.890 on them then communicate this 00:01:53.42000:01:53.430 information communicate this information 00:01:58.57000:01:58.580 about the economic entity about the 00:02:01.16000:02:01.170 transactions about the company to 00:02:03.23000:02:03.240 someone who's interested two interested 00:02:05.24000:02:05.250 parties now who are these interested 00:02:07.16000:02:07.170 parties we'll gonna find out later on 00:02:09.04000:02:09.050 shortly who are the most interested 00:02:11.84000:02:11.850 interested parties in this financial 00:02:14.24000:02:14.250 information so the economic entity okay 00:02:19.61000:02:19.620 so we have an entity basically a 00:02:21.83000:02:21.840 business economic entity is a business 00:02:25.55000:02:25.560 so we need to collect financial 00:02:27.50000:02:27.510 information financial information means 00:02:29.69000:02:29.700 information that involve dollar amount 00:02:31.82000:02:31.830 okay so we identify measure and 00:02:34.25000:02:34.260 communicate this information once again 00:02:36.05000:02:36.060 let's assume we made the sale that's the 00:02:39.23000:02:39.240 financial information then we're going 00:02:41.18000:02:41.190 to communicate this information through 00:02:43.43000:02:43.440 means means such as the balance sheet 00:02:46.88000:02:46.890 income statement statement of cash flow 00:02:49.85000:02:49.860 statements of stockholders equity as 00:02:52.10000:02:52.110 health as well as the note so we're 00:02:54.05000:02:54.060 going to communicate so we're going to 00:02:55.34000:02:55.350 identify the activities then we are 00:02:58.31000:02:58.320 going to communicate the information via 00:03:02.03000:03:02.040 financial statements and each financial 00:03:05.00000:03:05.010 statement will cover a specific topic 00:03:07.82000:03:07.830 now in this chapter I'm just going to 00:03:09.83000:03:09.840 name them and you should have covered 00:03:11.90000:03:11.910 those in accounting one and we're going 00:03:14.75000:03:14.760 to be covering those in depth shortly in 00:03:16.76000:03:16.770 Chapter three four as well as other 00:03:18.38000:03:18.390 chapter for example on the balance sheet 00:03:20.18000:03:20.190 its assets equal to liabilities plus 00:03:22.79000:03:22.800 equity on the income statement you will 00:03:24.53000:03:24.540 see your revenues minus your expenses on 00:03:26.39000:03:26.400 the cash flow you're going to have your 00:03:28.04000:03:28.050 operating financing and investing 00:03:31.52000:03:31.530 section statements of stockholders 00:03:34.16000:03:34.170 equity as well as we're going to see the 00:03:35.75000:03:35.760 disclosures later on so we communicate 00:03:38.18000:03:38.190 this information to users now remember 00:03:41.33000:03:41.340 we're going to be following gap gap is 00:03:43.67000:03:43.680 generally accepted accounting principles 00:03:44.96000:03:44.970 will talk about gap 00:03:46.85000:03:46.860 more further in this chapter now the 00:03:48.71000:03:48.720 financial statements may not be enough 00:03:50.71000:03:50.720 may not be enough to communicate 00:03:52.67000:03:52.680 information so what we need to do we 00:03:54.89000:03:54.900 need to provide additional informations 00:03:58.25000:03:58.260 to the users what additional 00:04:00.11000:04:00.120 informations with the users be with the 00:04:04.10000:04:04.110 interests that party be interested in 00:04:06.11000:04:06.120 for example maybe a letter from the 00:04:07.94000:04:07.950 president telling us how the company is 00:04:09.65000:04:09.660 doing right from the president okay 00:04:12.69900:04:12.709 maybe every once in a while news 00:04:16.91000:04:16.920 releases environmental impact statement 00:04:19.31000:04:19.320 some type of a forecast okay reports 00:04:22.28000:04:22.290 filed with governmental agencies any 00:04:24.11000:04:24.120 prospectus so this will be additional 00:04:26.30000:04:26.310 information that communicate information 00:04:28.73000:04:28.740 about the entity and eventually we're 00:04:30.71000:04:30.720 going to cover more in-depth information 00:04:34.49000:04:34.500 about all these topics later on later on 00:04:38.42000:04:38.430 okay so the first question is what is 00:04:41.93000:04:41.940 the what is the purpose of information 00:04:44.78000:04:44.790 presented in the notes of the financial 00:04:46.49000:04:46.500 statements so the question is why do we 00:04:49.01000:04:49.020 provide notes additional information in 00:04:51.95000:04:51.960 the financial statements is it to 00:04:54.68000:04:54.690 provide the Scrope the script disclosure 00:04:56.71900:04:56.729 required by GAAP is it the correct 00:04:59.00000:04:59.010 improper presentation no if there is we 00:05:01.85000:05:01.860 don't we don't provide notes notes or 00:05:05.43000:05:05.440 this part here notes why do we provide 00:05:08.52000:05:08.530 notes to the financial statements okay 00:05:12.12000:05:12.130 it's definitely not to correct an error 00:05:14.07000:05:14.080 to provide recognition of amounts that 00:05:16.47000:05:16.480 included in the total know we provide 00:05:18.90000:05:18.910 all the numbers in the financial 00:05:20.52000:05:20.530 statements that we need to provide to 00:05:22.73000:05:22.740 present management response to auditors 00:05:25.25000:05:25.260 absolutely not that's not how we 00:05:27.24000:05:27.250 communicate with Auditor so the answer 00:05:29.31000:05:29.320 is to provide disclosure required by gap 00:05:31.50000:05:31.510 gap again we have not covered gap yet 00:05:34.20000:05:34.210 gap is generally accepted accounting 00:05:36.33000:05:36.340 principle and GAAP require you to 00:05:39.18000:05:39.190 provide notes on the financial 00:05:43.20000:05:43.210 statements notes our additional 00:05:44.82000:05:44.830 disclosure why the additional disclosure 00:05:47.10000:05:47.110 is to give us more information about the 00:05:48.87000:05:48.880 company so the numbers may not be good 00:05:50.52000:05:50.530 enough by themselves what's going to 00:05:52.68000:05:52.690 happen we're going to need to learn 00:05:53.79000:05:53.800 additional information about the company 00:05:56.16000:05:56.170 in addition to the numbers okay now 00:05:59.01000:05:59.020 we're going to explain how accounting 00:06:00.39000:06:00.400 assists in the efficiency use of scarce 00:06:02.58000:06:02.590 resources so the purpose of accounting 00:06:05.01000:06:05.020 is to assist is to assist people and 00:06:09.03000:06:09.040 making decisions about a business 00:06:11.88000:06:11.890 decisions in a world of scarcity because 00:06:15.09000:06:15.100 resources are limited we have scarcity 00:06:17.34000:06:17.350 so it's very important to know how to 00:06:20.28000:06:20.290 allocate your capital how to allocate 00:06:23.28000:06:23.290 your capital and what is your capital 00:06:26.25000:06:26.260 your capital is your money how do how to 00:06:29.84000:06:29.850 invest your money 00:06:31.40900:06:31.419 okay so accounting that's going to help 00:06:33.48000:06:33.490 us in the capital allocation what 00:06:36.54000:06:36.550 happened is this accounting is the 00:06:39.42000:06:39.430 bridge between two groups investors 00:06:46.95000:06:46.960 and enter per nose so on one side we 00:06:52.83000:06:52.840 have the enterpreneurs with business 00:06:54.68900:06:54.699 ideas and on the other hand we have the 00:06:59.76000:06:59.770 investors that has the money so between 00:07:02.21900:07:02.229 those two groups we need something a 00:07:04.56000:07:04.570 bridge a bridge to communicate 00:07:07.92000:07:07.930 information between those two 00:07:09.27000:07:09.280 individuals so investors will invest and 00:07:12.71900:07:12.729 the businesses of the enterpreneur and 00:07:15.36000:07:15.370 here comes the accounting role so 00:07:19.08000:07:19.090 accounting will help investors 00:07:22.07000:07:22.080 who are enter pair who are capital 00:07:24.95000:07:24.960 holder to allocate their money so 00:07:27.02000:07:27.030 efficient use of resources often 00:07:28.79000:07:28.800 determine which business will thrive 00:07:30.11000:07:30.120 because remember you're going to have 00:07:31.49000:07:31.500 many entrepreneurs you can have many of 00:07:34.10000:07:34.110 those and how how is the investor is 00:07:36.80000:07:36.810 going to determine in which business 00:07:38.51000:07:38.520 they will invest well well depending on 00:07:41.05900:07:41.069 how much they trust the accounting 00:07:42.40900:07:42.419 information assuming accounting 00:07:43.70000:07:43.710 information is trustworthy then they 00:07:45.80000:07:45.810 will choose the the company that has the 00:07:47.62900:07:47.639 best information so so accounting will 00:07:51.23000:07:51.240 help investors allocate the funds sets 00:07:54.20000:07:54.210 allocate the funds in the most efficient 00:07:57.29000:07:57.300 way okay 00:07:58.68900:07:58.699 so financial reporting what's financial 00:08:01.79000:08:01.800 reporting the financial information a 00:08:03.68000:08:03.690 company provide to help users with 00:08:06.11000:08:06.120 capital allocation decisions so 00:08:07.99900:08:08.009 financially financial reporting is 00:08:10.45900:08:10.469 basically providing information whatever 00:08:13.33900:08:13.349 information financial statements plus 00:08:15.43900:08:15.449 notes what we saw earlier financial 00:08:18.40900:08:18.419 statements and notes that the financial 00:08:20.48000:08:20.490 statements this is what we provide to 00:08:22.33900:08:22.349 the users financial statements as well 00:08:25.12900:08:25.139 as notes as well as additional 00:08:27.23000:08:27.240 disclosures so this is what financial 00:08:29.80900:08:29.819 information the users are usually 00:08:32.68000:08:32.690 present and potential the main users are 00:08:35.95900:08:35.969 investors and creditors why because 00:08:38.30000:08:38.310 investors and creditors provide capital 00:08:43.75000:08:43.760 those two groups provide capital now the 00:08:46.79000:08:46.800 password for this session 00:08:50.03000:08:50.040 this class 1 class 1 the password just 00:08:55.05000:08:55.060 make a note of it ok so the users of the 00:08:58.02000:08:58.030 accounting informations are investors 00:08:59.76000:08:59.770 and creditors why because they provide 00:09:02.13000:09:02.140 capital to the business so they're very 00:09:07.80000:09:07.810 interested in accounting information ok 00:09:10.44000:09:10.450 so they use their financial report to 00:09:12.78000:09:12.790 make capital allocation and without 00:09:14.85000:09:14.860 financial reports they cannot make a 00:09:17.16000:09:17.170 proper allocation because they don't 00:09:19.14000:09:19.150 know how well a business is making they 00:09:21.30000:09:21.310 don't know how well the business is 00:09:22.50000:09:22.510 making ok so what is capital allocation 00:09:24.84000:09:24.850 the process of determining how and at 00:09:26.94000:09:26.950 what cost money is allocated among 00:09:28.68000:09:28.690 competing interests now for every Google 00:09:31.97000:09:31.980 you had so many failed businesses ok but 00:09:38.61000:09:38.620 if no one invested in Google if no one 00:09:41.79000:09:41.800 gave Google money to start their 00:09:43.80000:09:43.810 business then Google would never exist 00:09:45.57000:09:45.580 even it might have been the best idea 00:09:47.28000:09:47.290 but without someone giving you money and 00:09:50.12000:09:50.130 before Google received the money they 00:09:52.35000:09:52.360 would have to show their financial 00:09:54.12000:09:54.130 performance they have to show how well 00:09:55.98000:09:55.990 they are doing as a company and how do 00:09:57.93000:09:57.940 they communicate this information they 00:10:00.00000:10:00.010 communicate this information through 00:10:02.01000:10:02.020 accounting so they have prepared our 00:10:04.05000:10:04.060 accounting record and through the 00:10:05.70000:10:05.710 accounting record they will they will 00:10:08.76000:10:08.770 communicate this information ok question 00:10:11.61000:10:11.620 an effective process of a capital 00:10:13.11000:10:13.120 allocation is critical to a healthy 00:10:14.67000:10:14.680 economy which does what so if we have a 00:10:16.77000:10:16.780 healthy economy and how how is an 00:10:20.85000:10:20.860 effective process happen well through 00:10:24.30000:10:24.310 what do we promote does it promote 00:10:26.76000:10:26.770 productivity absolutely does it 00:10:28.95000:10:28.960 encourage innovation absolutely does it 00:10:31.50000:10:31.510 provide an efficient and liquid market 00:10:33.21000:10:33.220 of buying and selling securities 00:10:34.56000:10:34.570 absolutely ok so an effective process 00:10:37.23000:10:37.240 will do all the following for have an 00:10:38.97000:10:38.980 effective process of capital allocation 00:10:41.31000:10:41.320 and once we have enough enough 00:10:43.44000:10:43.450 information to make good capital 00:10:44.94000:10:44.950 allocation all these are achieved we 00:10:47.58000:10:47.590 productivity is increased 00:10:50.37000:10:50.380 innovation is encouraged because we have 00:10:52.84000:10:52.850 people competing and we have a market 00:10:56.11000:10:56.120 that allows us to buy and sell stocks ok 00:10:59.23000:10:59.240 and what then what do the numbers means 00:11:01.54000:11:01.550 make sure to read those short articles 00:11:03.55000:11:03.560 sometimes I go over them in the lecture 00:11:05.02000:11:05.030 sometime I don't but make sure to read 00:11:08.02000:11:08.030 them so I'm going to go over this in 00:11:09.01000:11:09.020 sets D since it's relevant to what we 00:11:11.56000:11:11.570 are saying it's accounting that's what 00:11:13.60000:11:13.610 many investor seems to be saying these 00:11:15.19000:11:15.200 days even the slightest of an accounting 00:11:17.11000:11:17.120 irregularity of the company leads the 00:11:19.12000:11:19.130 subsequent pounding of the company's 00:11:20.65000:11:20.660 stock price so if investors don't trust 00:11:23.92000:11:23.930 the numbers ok the stock price will 00:11:27.37000:11:27.380 suffer the stock will go down for 00:11:29.80000:11:29.810 example The Wall Street Journal has run 00:11:31.39000:11:31.400 the following headlines related to 00:11:32.74000:11:32.750 accounting and its effect on the economy 00:11:34.06000:11:34.070 ok 00:11:35.17000:11:35.180 stocks take a beating as accounting woes 00:11:37.96000:11:37.970 spread beyond Enron so and rounded 00:11:40.63000:11:40.640 really lot of damage to the economy 00:11:43.17000:11:43.180 quarterly reports quarterly to be 00:11:46.33000:11:46.340 specific accounting reports from ibn and 00:11:50.14000:11:50.150 Goldman Sachs and stocks tumbling Vera 00:11:52.69000:11:52.700 found find the accounting issues stock 00:11:55.03000:11:55.040 price cut in half so that the value of 00:11:57.25000:11:57.260 the company was cut in half 00:11:58.39000:11:58.400 Bank of America admits hiding debt 00:12:01.24000:12:01.250 Facebook Zynga Groupon IPO drops due to 00:12:04.72000:12:04.730 accounting not valuation ok it now has 00:12:09.01000:12:09.020 become clear that investors must must 00:12:11.02000:12:11.030 trust accounting numbers and this is 00:12:12.91000:12:12.920 where the accounting comes into play 00:12:14.74000:12:14.750 it's it communicate informations of the 00:12:17.86000:12:17.870 if we cannot trust the numbers it's a 00:12:19.99000:12:20.000 problem because if you don't trust the 00:12:21.64000:12:21.650 numbers you're going to sell the stock 00:12:23.83000:12:23.840 okay or they will abandon the market and 00:12:26.71000:12:26.720 put the resources somewhere else so if 00:12:28.27000:12:28.280 they don't like the numbers they cannot 00:12:29.68000:12:29.690 trust the numbers investors they go 00:12:31.42000:12:31.430 somewhere else okay with investor 00:12:33.49000:12:33.500 uncertainty the cost of capital increase 00:12:35.92000:12:35.930 for companies who need additional 00:12:37.06000:12:37.070 resources so if the accounting numbers 00:12:39.40000:12:39.410 are not trustworthy what's going to 00:12:41.38000:12:41.390 happen as an investor you want you will 00:12:43.45000:12:43.460 ask 00:12:44.80000:12:44.810 for hire return so you want more return 00:12:50.32000:12:50.330 therefore the cost of the company goes 00:12:52.63000:12:52.640 up so it's in the best interest of the 00:12:54.55000:12:54.560 company to do what the best interest of 00:12:56.14000:12:56.150 the company is to provide good 00:12:58.57000:12:58.580 information 00:12:59.50000:12:59.510 why relevant and reliable financial 00:13:02.05000:13:02.060 information is necessary for a market 00:13:04.54000:13:04.550 efficiency if you don't provide good 00:13:06.31000:13:06.320 information your cost of your cost of 00:13:10.06000:13:10.070 and the cost of raising money the cost 00:13:12.73000:13:12.740 of obtaining money becomes very 00:13:14.62000:13:14.630 expensive so it's in the best interest 00:13:16.54000:13:16.550 of the companies to provide not only 00:13:17.86000:13:17.870 accounting information good accounting 00:13:20.32000:13:20.330 information and we'll cover one topic in 00:13:23.41000:13:23.420 this chapter before we before we move on 00:13:25.90000:13:25.910 is identifying the objective of 00:13:28.57000:13:28.580 financial reporting so what is the goal 00:13:30.25000:13:30.260 objective is what is the goal of 00:13:32.08000:13:32.090 financial reporting well the financial 00:13:35.35000:13:35.360 reporting as we told you is to provide 00:13:37.08000:13:37.090 is to provide information useful 00:13:39.73000:13:39.740 information to be specific the 00:13:41.29000:13:41.300 information SP has to be useful - 00:13:44.08000:13:44.090 generally speaking two groups two groups 00:13:46.95000:13:46.960 lenders and creditors why those two 00:13:49.42000:13:49.430 groups because those are the capital the 00:13:52.66000:13:52.670 capital providers so we give them 00:13:55.15000:13:55.160 information to the what so they can make 00:13:57.10000:13:57.110 business decisions on making business 00:13:59.35000:13:59.360 decision in their capacity as capital 00:14:01.69000:14:01.700 provider we give them information so 00:14:03.64000:14:03.650 this information would help them make a 00:14:05.26000:14:05.270 decision okay and hopefully this 00:14:07.48000:14:07.490 decision will be will be in the best 00:14:10.09000:14:10.100 interest not only to them but in the in 00:14:12.10000:14:12.110 best interest of the economy because if 00:14:15.25000:14:15.260 if if lenders and creditors did not give 00:14:18.07000:14:18.080 Microsoft Apple 00:14:21.61000:14:21.620 Dow Walmart money those company would 00:14:26.98000:14:26.990 not exist because he needed someone 00:14:28.72000:14:28.730 who's willing to put their money on the 00:14:30.61000:14:30.620 line to invest in a company to believe 00:14:32.71000:14:32.720 in a company so the company get flourish 00:14:34.81000:14:34.820 expand and provide goods and services 00:14:37.60000:14:37.610 and our standard of living will increase 00:14:39.94000:14:39.950 okay so the general purpose financial 00:14:43.69000:14:43.700 statements provide information to avoid 00:14:45.63000:14:45.640 to to a wide variety of users but 00:14:48.79000:14:48.800 remember the two main groups are 00:14:50.89000:14:50.900 investors and creditors okay and the 00:14:53.80000:14:53.810 purpose is to provide information at the 00:14:56.53000:14:56.540 least possible cost so so you don't want 00:14:59.20000:14:59.210 this information to be costly okay 00:15:01.44000:15:01.450 remember this is the general purpose 00:15:03.91000:15:03.920 financial statements but the primary 00:15:06.82000:15:06.830 users are investors and creditors so the 00:15:10.93000:15:10.940 primary users okay okay so while the 00:15:15.67000:15:15.680 objective of financial is focused on 00:15:17.38000:15:17.390 investors and creditors so this is the 00:15:19.24000:15:19.250 primary objective others can use the 00:15:23.11000:15:23.120 financial statement so it doesn't have 00:15:24.55000:15:24.560 to be only it doesn't have to be only 00:15:27.63000:15:27.640 creditors and debtors anyone the 00:15:29.76900:15:29.779 government the suppliers all the 00:15:32.53000:15:32.540 suppliers are a form of creditors may be 00:15:35.94000:15:35.950 government agencies local may be the 00:15:39.97000:15:39.980 Union that's that's that's that's 00:15:42.79000:15:42.800 involve consumers we want to look at 00:15:45.51900:15:45.529 financial information before we buy from 00:15:47.74000:15:47.750 a certain company so anyone can be users 00:15:49.78000:15:49.790 of financial information entity 00:15:53.01900:15:53.029 perspective now we need to know what 00:15:54.61000:15:54.620 entity perspective means entity 00:15:56.05000:15:56.060 perspective means the company viewed is 00:15:58.09000:15:58.100 viewed as a separate and distinct from 00:16:00.37000:16:00.380 it the owner now you learn this in 00:16:02.59000:16:02.600 accounting 101 we're just going to 00:16:04.03000:16:04.040 emphasize this again this is called the 00:16:06.34000:16:06.350 entity or the economic perspective so 00:16:08.76900:16:08.779 the company exists 00:16:11.19000:16:11.200 as a separate entity from the owners so 00:16:16.89000:16:16.900 when we do accounting we do accounting 00:16:18.48000:16:18.490 for the entity itself not for the users 00:16:21.09000:16:21.100 okay decision usefulness now we have to 00:16:25.41000:16:25.420 keep in mind that we have to give 00:16:28.53000:16:28.540 information that's useful that can be 00:16:31.20000:16:31.210 used as a useful and investors are 00:16:33.18000:16:33.190 interested in assessing the company's 00:16:34.53000:16:34.540 ability to generate inflow of cash so as 00:16:37.95000:16:37.960 an investor you want to know how much 00:16:39.78000:16:39.790 cash the company will make why because 00:16:42.27000:16:42.280 cash is king 00:16:43.17000:16:43.180 cash is what the investors are 00:16:44.58000:16:44.590 interested in because they want the 00:16:46.29000:16:46.300 dividend they want part of the cash they 00:16:48.87000:16:48.880 want part of the cash and form of 00:16:50.34000:16:50.350 dividend dividend is when they pay you 00:16:52.11000:16:52.120 out the profit okay and investors are 00:16:57.06000:16:57.070 interested in the management ability to 00:16:59.04000:16:59.050 protect and enhance the capital 00:17:00.66000:17:00.670 providers investments so that we don't 00:17:02.64000:17:02.650 only want the money we want you to 00:17:04.11000:17:04.120 protect our investments how we want the 00:17:06.81000:17:06.820 management to make sure they are using 00:17:08.67000:17:08.680 this money adequately they are not 00:17:10.68000:17:10.690 spending it on perks for themselves 00:17:13.26000:17:13.270 they're spending it to enhance the 00:17:15.71000:17:15.720 company okay so for example here in 00:17:20.73000:17:20.740 addition to providing decision 00:17:21.96000:17:21.970 usefulness information about future cash 00:17:23.79000:17:23.800 flow management is also accountable to 00:17:26.22000:17:26.230 investors for the custody and 00:17:28.35000:17:28.360 safekeeping of the company's economic 00:17:30.78000:17:30.790 resources and their efficiency and 00:17:32.37000:17:32.380 profitable use think about it when you 00:17:34.41000:17:34.420 invest in a company when you give your 00:17:35.88000:17:35.890 money to Microsoft okay or to Apple 00:17:40.74000:17:40.750 what's going to happen you are thrusting 00:17:42.57000:17:42.580 the company you are basically giving 00:17:44.07000:17:44.080 your money to someone who's working 00:17:45.45000:17:45.460 there how do you know that they're not 00:17:47.10000:17:47.110 using this money for their own personal 00:17:48.86900:17:48.879 use or their own personal perks to 00:17:51.84000:17:51.850 increase their salaries and fly take 00:17:57.45000:17:57.460 personal flights or spend money where 00:18:00.33000:18:00.340 they're not supposed to be spending 00:18:01.35000:18:01.360 money for example the management of 00:18:02.85000:18:02.860 Hershey's Hershey company has the 00:18:04.74000:18:04.750 responsibility for protecting its 00:18:06.14900:18:06.159 economic resources from the unfavorable 00:18:08.43000:18:08.440 effect of economic factors such as price 00:18:10.35000:18:10.360 changes technological and social changes 00:18:12.48000:18:12.490 so the company is responsible not only 00:18:14.19000:18:14.200 for protecting their asset your money 00:18:16.86000:18:16.870 they're also protecting the the company 00:18:19.32000:18:19.330 overall because by protecting the 00:18:20.90900:18:20.919 company they are protecting the economic 00:18:22.95000:18:22.960 entity okay so this is called 00:18:26.49000:18:26.500 stewardship responsibility so it 00:18:28.44000:18:28.450 management is responsible for for for 00:18:33.36000:18:33.370 safekeeping the assets that they are 00:18:36.56000:18:36.570 entrusted with entrusted with so 00:18:39.48000:18:39.490 therefore they have to provide useful 00:18:40.76900:18:40.779 information and assessing the role as 00:18:43.71000:18:43.720 managers to the users because the 00:18:45.77900:18:45.789 investors wants to wants to judge you 00:18:48.81000:18:48.820 they wants to know how well you are 00:18:50.31000:18:50.320 doing ok so this is basically the first 00:18:53.03900:18:53.049 three objective of this chapter the next 00:18:55.11000:18:55.120 thing we look at this will explain the 00:18:57.18000:18:57.190 need for accounting standards if you 00:18:59.87900:18:59.889 have any questions any comments by all 00:19:01.37900:19:01.389 means email me or see me in class and 00:19:03.84000:19:03.850 make sure I don't like I cannot 00:19:05.97000:19:05.980 emphasize this enough make sure to read 00:19:08.10000:19:08.110 your textbook make sure to read your 00:19:10.37900:19:10.389 textbook
Office location
Engineering company LOTUS®
Russia, Ekaterinburg, Lunacharskogo street, 240/12