Page 462 - Introduction to Business

436 PART 4 Accounting

they receive. The firm’s management is also concerned LEARNING OBJECTIVE 5
about the reliability and integrity of the reports pro- Discuss the impact of technology, particularly
duced by the AIS. Both internal auditing and external resources on the Web, on accounting.
auditing help provide the assurances needed by Advances in information technology have dramatically
decision makers who rely on financial statements.
altered the business world, especially in accounting.
The accumulation, storage, and processing of vast
LEARNING OBJECTIVE 4
amounts of financial data once required armies of
Explain the steps in foreign currency translation, a
necessary element in financial reporting of “number-crunchers.” Now the number-crunching is
multinational business firms. turned over to computers. Accountants are able to focus
on other roles in the firm, such as financial analysis,
Most large U.S. companies have multinational operational auditing, internal control evaluation, and
operations, with foreign subsidiaries around the globe. managerial planning.
When a U.S. corporation owns more than 50 percent of Websites can be helpful for researching financial
the voting stock of a foreign company, a parent- reporting and other accounting issues. Websites are
subsidiary relationship exists. The parent company is available for obtaining information on financial
usually required to prepare consolidated financial accounting, auditing, international accounting and
statements. Before this can be done, the financial auditing, research and publications, accounting
statements of the foreign subsidiary must be recast organizations, and other issues. Knowing where to go
using U.S. generally accepted accounting principles can save considerable time and effort in conducting
(GAAP). research on the Web.

Chapter Questions Internet within a decade. Do you think this is
likely? How might this affect a firm’s business
1. Who uses accounting information and for what operations?
purpose? 2. In a news story about a company going bankrupt,
2. List some of the decisions that business managers the writer suggested that the auditors had failed in
must make. doing their job. Are business failures the result of
3. What are the components of the income poor auditing?
statement? 3. People sometimes say that the world is shrinking.
4. What are the components of the statement of Thanks to improved communications and
retained earnings? transportation technologies, the world doesn’t
5. What are the components of the balance sheet? seem as large as it once did. A news article about
6. What are the components of the statement of cash international trade predicted that global commerce
flows? would increase dramatically in the coming year. Do
7. List the four essential questions that are answered you think international trade will increase? Will
by the four financial statements. that be good or bad for U.S. companies?
8. Who conducts an external audit and who benefits
from the audit?
9. Contrast external auditing with internal auditing. Web Assignments
10. Describe the basic steps in an audit.
11. How has computerization affected auditing? 1. Sony Corporation is a leading manufacturer of
12. What is the audit trail? audio, video, communications, and information
13. What is foreign currency translation and why is it technology products for the consumer and
necessary? professional markets. Sony’s music, motion
14. Give an example of how an accountant might use picture, television, computer entertainment, and
the Web to help on the job. online businesses make the firm one of the most
15. Briefly describe the origin of the Internet. comprehensive entertainment companies in the
world. Go to the website of Sony Corporation
(sony.com). Where is the firm’s worldwide
Interpreting Business News headquarters? Where is the firm’s U.S.
headquarters (Sony Corporation of America)?
1. In a news article about the advances in What were Sony’s worldwide sales? U.S.
information technology, the writer predicted sales? How many people are employed by
everyone in the world would have access to the Sony?

Copyright 2010 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.