Essay on Accounting Chapter 1

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Accounting: * Is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization’s business activities * Identifying business activities requires selecting transactions and events relevant to an organization. * Recording business activities requires keeping a chronological log of transactions and events measured in dollars and classified and summarized in a useful format. * Communicating business activities requires preparing accounting reports such as financial statements. * It also requires analyzing and interpreting such reports. * Recordkeeping is the recording of transactions and events, either manually and electronically.
Users of Accounting Information: * Accounting is often called the language of business because all organizations set up an accounting information system to communicate data to help people make better decisions. * Two groups of users:

* EXTERNAL INFORMATION USERS: * Not directly involved in running the organization * Lenders * Shareholders * Governments * External auditors * Customers * Financial accounting is the area of accounting aimed at serving external users by providing them with general-purpose financial statements. * INTERNAL INFORMATION USERS: * Directly involved in managing and operating an organization * Managerial accounting is the area of accounting that serves the decision-making needs of internal users * Designed with the special needs of internal users in mind. * They are * Officers * Managers * Internal auditors * Controllers
Opportunities in Accounting * Accounting has four broad areas of opportunities: * Financial * Preparation and analysis * Auditing and regulatory * Consulting * Criminal investigation * Managerial * General accounting * Cost accounting * Budgeting * Strategy * Taxation * Preparation and planning * Regulatory and investigative * Enforcement * Legal services * Estate plans * Accounting-related * FBI investigations * Forensic accounting * Business valuations * System designers * Entrepreneurs * Litigation support
Types of Accounting * Private Accounting * Employees working for businesses * Largest amount of jobs * Certificate in Management Accounting (CMA) * Certified Internal Auditor (CIA) * Public Accounting * Offers the next largest number of opportunity which involve services such as auditing and tax advice to a vast range of business * Certified Public Accountants (CPA) * Certified Fraud Examiner (CFE) * Certified Forensic Accountant (CrFA)
Ethics
* Are beliefs that distinguish right from wrong * They are accepted standards of good and bad behavior * Steps * Identify ethical concerns * Analyze options * Make ethical decisions
Generally Accepted Accounting Principles (GAAP) * Financial accounting practice is governed by concepts and rules. * GAAP aims to make information in financial statements * Relevant * Reliable * Comparable * Securities and Exchange Commission (SEC) * A government agency that has the legal authority to set GAAP * Oversees proper use of GAAP by companies that raise money from the public through issuances of their stock and debt * Financial Accounting Standards Board (FASB) * Private-sector group that sets both broad and specific principles
International Standards * International Accounting Standards Board (IASB) * An independent group issues
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