Intermediate Accounting
1. WHAT IS ACCOUNTING?
Accounting consists of three basic activities—it identifies, records, and
communicates the economic events of an organization to interested users. Let’s
take a closer look at these three activities.
Three Activities
To identify economic events, a company selects the economic events
relevant to its business. Examples of economic events are the sale of snack chips
by PepsiCo, providing of telephone services by AT&T, and payment of wages by
Ford Motor Company.
Once a company like PepsiCo identifies economic events, it records those
events in order to provide a history of its financial activities. Recording consists of
keeping a systematic, chronological diary of events, measured in dollars and cents.
In recording, PepsiCo also classifies and summarizes economic events.
Finally, PepsiCo communicates the collected information to interested users
by means of accounting reports. The most common of these reports are called
financial statements. To make the reported financial information meaningful,
Kellogg reports the recorded data in a standardized way. It accumulates information
resulting from similar transactions.
2. WHO USES ACCOUNTING DATA?
The information that a user of financial information needs depends upon the kinds of
decisions the user makes. There are two broad groups of users of financial information: internal
users and external users.
2.1 INTERNAL USERS
Internal users of accounting information are those individuals inside a company who
plan, organize, and run the business. These include marketing managers, production supervisors,
finance directors, and company officers.
2.2 EXTERNAL USERS
External users are individuals and organizations outside a company who want financial
information about the company. The two most common types of external users are investors and
creditors. Investors (owners) use accounting information to make decisions to buy, hold, or sell
ownership shares of a company. Creditors (such as suppliers and bankers) use accounting
information to evaluate the risks of granting credit or lending money.
Financial accounting provides information for people outside the firm, such as
, investors, bankers, government agencies, and the public. This information must meet standards
of relevance and reliability.
Management accounting generates inside information for the managers of YUM!
Brands. Management information doesn’t have to meet external standards of reliability because
only company employees use these data.
3. CAREERS IN HOSPITALITY ACCOUNTING
Hospitality management accounting is concerned with providing specialized internal
information to managers that are responsible for directing and controlling operations within the
hospitality industry. Internal information is the basis for planning alternative short- or long-term
courses of action and the decision as to which course of action is selected. Specific detail is
provided as to how the selected course of action will be implemented. Managers direct the
needed material resources and motivate the human resources needed to carry out a selected
course of action. Managers control the implemented course of action to ensure the plan is being
followed and, as necessary, modified to meet the objectives of the selected course of action.
For the student interested in accounting, there are a variety of career opportunities in the
hospitality industry. First, there is general accounting, which includes the recording and
production of accounting information and/or specialization in a particular area such as food
service and beverage cost control. Second, larger organizations might offer careers in the design
(or revision) and implementation of accounting systems. A larger organization might also offer
careers in budgeting, tax accounting, and auditing that verifies accounting records and reports of
individual properties in the chain.
4. ORGANIZING A BUSINESS
A business can take 1 of several forms:
-Proprietorship
- Partnership
-Limited-liability company (LLC)
1. WHAT IS ACCOUNTING?
Accounting consists of three basic activities—it identifies, records, and
communicates the economic events of an organization to interested users. Let’s
take a closer look at these three activities.
Three Activities
To identify economic events, a company selects the economic events
relevant to its business. Examples of economic events are the sale of snack chips
by PepsiCo, providing of telephone services by AT&T, and payment of wages by
Ford Motor Company.
Once a company like PepsiCo identifies economic events, it records those
events in order to provide a history of its financial activities. Recording consists of
keeping a systematic, chronological diary of events, measured in dollars and cents.
In recording, PepsiCo also classifies and summarizes economic events.
Finally, PepsiCo communicates the collected information to interested users
by means of accounting reports. The most common of these reports are called
financial statements. To make the reported financial information meaningful,
Kellogg reports the recorded data in a standardized way. It accumulates information
resulting from similar transactions.
2. WHO USES ACCOUNTING DATA?
The information that a user of financial information needs depends upon the kinds of
decisions the user makes. There are two broad groups of users of financial information: internal
users and external users.
2.1 INTERNAL USERS
Internal users of accounting information are those individuals inside a company who
plan, organize, and run the business. These include marketing managers, production supervisors,
finance directors, and company officers.
2.2 EXTERNAL USERS
External users are individuals and organizations outside a company who want financial
information about the company. The two most common types of external users are investors and
creditors. Investors (owners) use accounting information to make decisions to buy, hold, or sell
ownership shares of a company. Creditors (such as suppliers and bankers) use accounting
information to evaluate the risks of granting credit or lending money.
Financial accounting provides information for people outside the firm, such as
, investors, bankers, government agencies, and the public. This information must meet standards
of relevance and reliability.
Management accounting generates inside information for the managers of YUM!
Brands. Management information doesn’t have to meet external standards of reliability because
only company employees use these data.
3. CAREERS IN HOSPITALITY ACCOUNTING
Hospitality management accounting is concerned with providing specialized internal
information to managers that are responsible for directing and controlling operations within the
hospitality industry. Internal information is the basis for planning alternative short- or long-term
courses of action and the decision as to which course of action is selected. Specific detail is
provided as to how the selected course of action will be implemented. Managers direct the
needed material resources and motivate the human resources needed to carry out a selected
course of action. Managers control the implemented course of action to ensure the plan is being
followed and, as necessary, modified to meet the objectives of the selected course of action.
For the student interested in accounting, there are a variety of career opportunities in the
hospitality industry. First, there is general accounting, which includes the recording and
production of accounting information and/or specialization in a particular area such as food
service and beverage cost control. Second, larger organizations might offer careers in the design
(or revision) and implementation of accounting systems. A larger organization might also offer
careers in budgeting, tax accounting, and auditing that verifies accounting records and reports of
individual properties in the chain.
4. ORGANIZING A BUSINESS
A business can take 1 of several forms:
-Proprietorship
- Partnership
-Limited-liability company (LLC)
