AFTER STUDYING THIS CHAPTER, YOU SHOULD BE ABLE TO:
■ LO1 Demonstrate a basic understanding of the functions of accounting.
■ LO2 Identify the three fundamental business activities that financial accounting
■ LO3 Show how financial accounting information is communicated through financial
■ LO4 Recognize how accurate financial accounting supports the efficient distribution of
■ LO5 Realize that financial accounting applies rules and procedures known as generally
accepted accounting principles (GAAP).
■ LO6 Identify career opportunities available in accounting.
■ LO7 Appreciate the conceptual framework that is used to develop generally accepted
and Decision Making
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Michael was not your average college student. Since age 12, when he started his first
business venture selling stamps, he realized that if you have a good idea, work hard, and
treat the customer with special care, you can make a lot of money. After a series of small,
successful business ventures through high school, Michael came up with his next business
idea in 1984 at age 19. With an initial start-up investment of only $1,000, he started a
company that custom-built personal computers for sale directly to the customer. The
company enjoyed immediate success. In 1988, the company conducted its initial offering
of 3,500,000 shares of stock for $8.50 per share and changed its name to Dell Incorporated.
By the age of 26, Michael Dell had become the youngest CEO of a company ever included on the
prestigious Fortune 500 list. Better yet, Dell’s stock enjoyed greater growth than any other stock during
the 1990s. By December 31, 1999, each share had increased in value nearly 60,000%. If you had invested
just $1,000 in Dell at its initial public offering in 1988, your investment would ha