Identify at least two situations in which important

1 CHAPTER 3: Review of the Accounting System Purpose andComponents of an Accounting System The purpose of a company’s accounting system is to record, organize, summarize, and report useful information to external financial statement users and stakeholders, as well as to the company’s managers for making operating, investing, and financing decisions. The basic components include:  Accounting equation (framework of the system)  Source documents (to generate accounting information)  Records (to organize and store accounting information)  Outputs (ex: financial statements) The Accounting Equation