| Walgreen Co. is a nationwide store chain and has | | | | order to get enough funds or capital so they can |
| over 3,000 stores and pharmacies and is a retail | | | | continue their operating. Financial activities include |
| store phenomenon and has over 27 years of | | | | receiving capital from creditors such as banks and |
| record crumbling sales. Wow what's the secret | | | | other suppliers. On the other hand they also |
| Walgreen? Why are you so successful? | | | | include paying creditors back. |
| Well, customers like their high class customer | | | | Second, each business must participate in what is |
| service, their huge selection, and quality products. | | | | known as investing activities. This refers to the |
| Some investment and other companies with a | | | | productive spending of capital so that it will help a |
| financial interest in Walgreen look at the past | | | | business attain their goals in an orderly manner. |
| success of the company and evaluate its financial | | | | Some examples of investing activities include |
| management. The companies that are interested | | | | purchasing land, equipment that the business may |
| will be seen in the Financial Highlights from the | | | | need, and buying buildings. These resources are |
| company's annual report. Net sales, total assets, | | | | then sold or discarded of when they are no longer |
| net earnings, and stock holder's equity are all | | | | needed. Third, another essential of every business |
| terms that are used to measure the financial | | | | is participating in operating activities. Besides selling |
| stake of the company. | | | | goods and services to customers, operating |
| It's nice that you see the large increase in | | | | activities include hiring managers, workers, and |
| Walgreens over the years, but what exactly does | | | | purchasing goods and services, and paying back |
| that mean? What financial knowledge is required | | | | taxes to the government. |
| of those who manage Walgreens and what | | | | An extremely crucial function of accounting is to |
| methods do they use to measure Walgreens to | | | | provide performance measures. This refers to |
| other large companies? Walgreen's managers | | | | the measures of a business that indicates |
| most be very skilled in accounting to help maintain | | | | whether managers are achieving or losing their |
| the financial stake of the company. | | | | business goals, which helps to determine if a |
| However, Walgreen' managers are not the only | | | | particular business is under good management. It |
| ones that need to be skilled in accounting. The | | | | is crucial for the performance to measure up with |
| people who have some type of financial stake in | | | | the goals of a business. |
| the business such as owners, investors, | | | | For a quick example, earned income is a |
| attorneys, employees, and creditors must also be | | | | measurement of profitability, and cash flow is the |
| skilled in accounting so they can analyze the | | | | measurement of liquidity, pretty simple right? |
| financial achievement of the company. Anyone | | | | Since most managers are evaluated by whether |
| who is interested in any one of theses roles will | | | | certain aimed goals are accomplished, they must |
| require some knowledge in accounting knowledge | | | | have a very sound understanding of accounting. |
| and processes. That's what the purpose of | | | | Since managers will try to achieve these goals |
| accounting is. | | | | they must be motivated so that they can |
| Contemporary accountants focus on the needs of | | | | perform in the best interest of a business. The |
| decisions in accounting information, whether these | | | | typical accounting role of helping decision makers |
| decisions are internal or external to the business. | | | | by processing, and communicating information |
| Accounting can be defined as a systematic | | | | effectively is furthermore divided into the |
| information system that measures, process, and | | | | subcategories of financial accounting and |
| produce financial information about an economic | | | | management accounting. Financial accounting is |
| matter such as a business or a government | | | | used for generating reports and communicating |
| organization. Accounting serves as a connection | | | | between outside decisions makers to analyze how |
| between business activities because it records | | | | well the business is performing. The reports to |
| information. | | | | the outside users are known as the financial |
| First, accounting analyzes business activity by | | | | statements. Companies who stocks are up for |
| recording data for them that they can use in the | | | | grabs on the New York Stock Exchange send |
| future. Second, the data is not used until it is | | | | their financial statements to its owners or |
| needed and retrieved when the time is | | | | shareholders, and several of other creditors. The |
| appropriate. Last, the information is analyzed and | | | | financial statements reflect the goals of |
| communicated through reports to the decision | | | | profitability and liability, and are used heavily by |
| makers. One might assume that the data about | | | | every person involved with the business. If you |
| business activities are the input and the | | | | have ANY type of business, it is crucial for you to |
| information for decision makers are the output. A | | | | be literate in financial statements. They are the |
| business is an economic entity that sells goods or | | | | back and bone of accounting. |
| services to customers at prices that will provide a | | | | Now, let's not get some terminology mixed up |
| return to the owners. Here is a list of well | | | | with each other. It's critical to distinguish the |
| branded business that sell goods: | | | | system of accounting from the ways that |
| General Mills Inc. sells food products. Sony Corp. | | | | information is processed such as bookkeeping, |
| sells a variety of consumer electronics. Hilton | | | | and some type of information management |
| Hotels Corp. sells resorts and hotels services. | | | | system. It's only a small part of accounting, but it |
| EBay Inc. offers an online bidding service. | | | | is a very important method. The major goals of |
| Despite their differences in the products they sell | | | | accounting are to analyze and interpret |
| they actually have a lot in common. Each business | | | | information. The computer is also an important |
| must have enough money for the cost of doing | | | | tool in accounting and is used to retrieve and |
| business but still have adequate money left over. | | | | organize information in great time and accuracy. |
| If the cost of business costs more than operating | | | | However, people may assume that the computer |
| the business, than that's when a business will start | | | | does all the work for the accountant, but that |
| to crumble. The need to earn money to hold an | | | | couldn't be more farther from the truth. The |
| investment capital is known as profitability. | | | | truth is, the computer is instructed what to do by |
| However, a business must meet the goal of | | | | the accountant and the main use of computers is |
| liquidity. Liquidity refers to having the money | | | | to process complicated information. Since |
| available to pay off debts when they are due. | | | | computers are so beneficial and widespread many |
| For example, a real estate company must meet | | | | business use computers as a management |
| the goal of profitability by leasing as many houses | | | | information system. This is a system of |
| as they can, but they also must meet the criteria | | | | connected subsystems that provide the |
| of liquidity when customers don't come up with | | | | necessary information to run a business. The |
| the capital to pay sometimes. Both of these goals | | | | accounting information system is without a doubt |
| must be aced by a company to be successful in | | | | the most important subsystem used because it is |
| their ventures. All businesses try to pursue their | | | | the key role in analyzing and managing the flow of |
| goals by engaging in these similar activities. First, | | | | financial data of a business. |
| businesses much start some financial activities in | | | | |