Accounting cyc1.

Accounting provides financial information about a business or a nonprofit organization. Owners,
managers, investors, and other interested parties need financial information in order to make
decisions. Because accounting is used to communicate financial information, it is often called the
“language of business.”


The Need for Financial Information
Suppose a relative leaves you a substantial sum of money and you decide to carry out your lifelong
dream of opening a small sportswear shop. You rent space in a local shopping center, purchase
fixtures and equipment, purchase goods to sell, hire salespeople, and open the store to customers.
Before long you realize that, to run your business successfully, you need financial information about
the business. You probably need information that provides answers to the following questions:


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the profit
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As your business grows, you will need even more financial information to evaluate the firm's
performance and make decisions about the future. An efficient accounting system allows owners and
managers to quickly obtain a wide range of useful information. The need for timely information is one
reason that businesses have an accounting system directed by a professional staff.


Accounting Defined

>> 1. OBJECTIVE
Accounting The process by which financial information about a

business is recorded, classified, summarized, interpreted, and
Define accounting.

communicated to owners, managers, and other interested parties is
the process by which financial information about a business is
recorded, classified, summarized, interpreted, and communicated to
owners, managers, and other interested parties. An accounting
system A process designed to accumulate, classify, and summarize

financial data is designed to accumulate data about a firm's financial
affairs, classify the data in a meaningful way, and summarize it in
periodic reports called financial statements Periodic reports of a

firm's financial position or operating results . Owners and managers
obtain a lot of information from financial statements. The accountant:

p. 5
establish
es the
records
and

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Most owners and managers rely heavily on the accountant's judgment and knowledge when
making financial decisions.


Accounting Careers

>> 2. OBJECTIVE
Many jobs are available in the accounting profession, and they
require varying amounts of education and experience.
Bookkeepers and accountants are responsible for keeping Identify and discuss
records and providing financial information about the business. career opportunities in
Generally, bookkeepers are responsible for recording business accounting.
transactions. In large firms, bookkeepers may also supervise the
work of accounting clerks. Accounting clerks are responsible for
recordkeeping for a part of the accounting system—perhaps
payroll, accounts receivable, or accounts payable. Accountants
usually supervise bookkeepers and prepare the financial
statements and reports of the business.




Newspapers and Web sites often have job listings for accounting clerks, bookkeepers, and
accountants:

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accountin
g courses
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or no
experienc
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of
accountin
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education
plus
experienc
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accountin
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sometime
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experienc
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bookkeep
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individual
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two-year
college