chapter 17

connect The Accounting Function VIDEO CASE at Goodwill Industries Goodwill Industries is a major charitable organization that similarities and differences between for-profit and not-for-profit relies primarily on financial and nonfinancial donations entities are discussed in detail. The importance of accounting and grants. It has retail operations that help sustain its in providing financial information and analysis is featured. financial operations so as to fulfill its mission to help train, Emphasis is placed on financial statements as well as support, and employ disadvantaged individuals and those ratio analysis in helping gauge the financial health of the with disabilities. organization The video introduces the accounting function and Accounting is crucial for all organizations, whether they the specific steps involved in the accounting cycle. The are a small business, large corporation, or a governmental or 460 PART 6 Managing Financial Resources not-for-profit organization. The different types of accounting financial performance. The results of these analyses help are discussed, including managerial, financial, tax, auditing, management assess the organization's performance against governmental, and not-for-profit. Balance sheets, income its plan or budget. They also help develop strategic plans statements, and statements of cash flows provide important for the future as well as benchmark against other similar information for managers and others in the organization, companies. helping demonstrate whether the organization is on budget or whether there are variances between projected and actual THINKING IT OVER revenues. Costs and expenses have to be kept in line and are 1. What's the difference between assets and liabilities? carefully monitored and analyzed by the accounting function. Which of the key financial statements features these Sufficient cash flow is critical to the sustainability of categories prominently? any organization, particularly the not-for-profit organiza- tion: in this case. Goodwill. Not-for-profit organizations 2. Identify the six steps in the accounting cycle. utilize performance ratio analysis to gauge their overall 3. What are the key reasons that firms do ratio analysis