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Accounting introduction

1. Role and purpose of Accounting

2. Chapter Outline 1.1.1 The role of accounting as a need to record, analyse and communicate accounting information to users. 1.1.2 The purpose of accounting information as an aid to the management of a business.

3. 1.1 What is Accounting? In simple terms, we can say that accounting is about recording, analysing and communicating information. information needs. Recording Once identifed, transactions must be recorded in an organised way, as the events take place. Analysing We need to be able to measure wealth, business profts or government spending. Communication In order for information to be useful, it needs to be communicated to other interested individuals or groups.  

4.   Distinguish between Financial and Managerial Accounting Financial accounting is concerned with the preparation of fnancial statements, covering the whole of the activities of the business, for use by external users. This area of accounting is normally regulated by law. Managerial accounting concerns itself with parts of the business, as well as the whole, and is used to help decision making by internal users, such as those in management. The main objective is planning and control.

5. 1.2 Identify Users of Accounting Information and How They Apply Information Users of accounting information are generally divided into two categories: internal and external.   Internal users are those within an organization who use financial information to make day-to-day decisions. They include managers and other employees who use financial information to confirm past results and help make adjustments for future activities. External users are those outside of the organization who use the financial information to make decisions or to evaluate an entity’s performance. They include investors, financial analysts, loan officers, governmental auditors, such as IRS agents, and an assortment of other stakeholders.

6. communicated through financial statements . Income Statement, Statement of Owner’s Equity, Balance Sheet, and Statement of Cash Flows and Disclosures Financial accounting information is mostly historical in nature Financial information is prepared using a comprehensive, prescribed set of conventions, called generally accepted accounting principles (GAAP ) . They are set by the Financial Accounting Standards Board (FASB ) . Part of an accountant’s responsibility is to quantify activities and events Characteristics of Financial Accounting Information

7. serve the needs of internal users . includes strategic or competitive decisions encompasses many activities within an organization uses both financial and nonfinancial information Characteristics of Managerial Accounting Information

8. Comparing Reports between Financial and Managerial Accounting. (attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)

9. Describe the Varied Career Paths Open to Individuals with an Accounting Education Characteristics of accounting professionals: Personal attributes G oal oriented P roblem solver O rganized and analytical Good interpersonal skills Pays attention to detail Good time-management skills O utgoing Education Entry-level positions: usually require a minimum of a bachelor’s degree Advanced positions: may consider factors such as years of experience, professional development, certifications, and advanced degrees, such as a master’s or doctorate Related careers An accounting degree is a valuable tool for other professions such as financial analysts, personal financial planners, and business executives.

10. Figure 1.8 Career Paths. There are many career paths open to students of accounting. (attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)

11. Auditing Taxation Financial accounting Consulting Accounting information services Cost and managerial accounting Financial planning Entrepreneurship Major Categories of Accounting Functions

12. Figure 1.10 Accountant Employer Types. Accountants may find employment within a variety of types of entities. (attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)