| Accounting is the methodology by which business | | | | governmental regulatory agencies, taxing |
| activities are measured, processed into reports, | | | | authorities at all levels, non profit organizations, |
| and results are communicated to decision makers. | | | | and sometimes employees and labor unions. |
| Accounting has been called the language of | | | | Accounting follows several different paths in |
| business. The better the language is understood, | | | | presenting reports. The accounting reports may |
| the better you can manage the financial aspects | | | | be prepared for management. Management |
| of everyday living. Business managers reported in | | | | accounting helps in making business decisions |
| a recent survey that they considered accounting | | | | about internal direction and needs of the business |
| as the single most important college class for | | | | or corporation. Financial accounting is usually |
| business majors to master. | | | | intended for a broader audience, such as |
| Car payments, personal budgeting, income taxes | | | | shareholders, lenders, or regulatory agencies as |
| are all based on information systems developed | | | | well as taxing agencies. |
| from accounting reports and principles. Accounting | | | | Auditing is related to accounting and also has two |
| reports allow people to make informed decisions | | | | main types. Internal auditors work within an |
| on business matters. Financial statements are | | | | organization to ensure that accounting practices |
| reports that display business of an individual or | | | | follow Generally Accepted Accounting Principles |
| corporation in monetary amounts. | | | | (GAAP), which are standardized format and policy |
| Bookkeeping is not the same as accounting. | | | | for accounting transactions and reports. These |
| Bookkeeping merely is the process of collecting | | | | guidelines might set standards for how inventory |
| information to be used in accounting. Today, much | | | | usage is to be recorded, for example first in/first |
| of the bookkeeping processes are being done by | | | | out, last in/in first out etc. This can make a |
| computer software programs. The decisions | | | | significant difference in determining the value of |
| based on the accounting reports still must be | | | | the inventory to be reported on the financial |
| made by people. | | | | statements. |
| Some of the people who use accounting | | | | External auditors are those hired by agencies such |
| information are the decision makers. The need for | | | | as the government to check on the activities of |
| accurate information cannot be downplayed. The | | | | the accounting reports prepared by the business |
| bigger the decision, the more accurate the | | | | or organization. An audit report is a report that |
| information must be. Some of the people and | | | | the business has or has not presented the |
| groups who use accounting information include | | | | financial reports so as to correctly represent the |
| individuals, businesses, investors and creditors, | | | | status of the business. |