2.However, you have to know something about accounting if you want tounderstand business.3.It is almost impossible to run a business effectively without being able toread, understand, and analyze accounting reports and financial statements.B.Accounting reports and financial statements are as revealing of the HEALTH OFA BUSINESS as pulse rate and blood pressure reports are in revealing the healthof a person.II.
WHAT IS ACCOUNTING?
is the recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested parties with the information they need to make good decisions.1.
include buying and selling goods andservices, acquiring insurance, using supplies, and paying taxes.2.An ACCOUNTING SYSTEM is the methods used to record andsummarize accounting data into reports.B.
PURPOSES OF ACCOUNTING:
1.To help managers evaluate the financial condition and the operating performance of the firm so they may make better decisions.2.To report financial information to people outside the firm such as owners,suppliers, and the government.C.Accounting is the measurement and reporting of financial information to varioususers regarding the economic activities of the firm.III.
AREAS OF ACCOUNTING.
A.Accounting has been called the
LANGUAGE OF BUSINESS,
but it also is thelanguage used to report financial information about nonprofit organizations.B.
is used to provide information andanalyses to managers within the organization to assist them in decisionmaking.2.Managerial accountants:a.
MEASURING AND REPORT COSTS
of production, marketing,and other functions. b.
.c.Checking whether or not units are
STAYING WITHIN THEIR BUDGETS.
d.DESIGNING STRATEGIES TO MINIMIZE TAXES.