ENGLISH FOR ACCOUNTING

In the 1999 The Internet or World Wide Web is booming, providing electronic connections among
individuals, companies, organizations, and governments. So many activities have moved to the Internet
that it is the centerpiece of what is called the “new economy.” Such Amazon and Cisco Company, they run
the business through internet world wide.

Because Cisco and Amazon is a publicly held company with stockholders, the accounting systems
and people must be pre- pared to generate financial reports quickly and accurately for use by decision
makers around the globe.

ACCOUNTING

Accounting is a process of identifying, recording, summarizing, and reporting economic

information to decision makers. Financial accounting focuses on the specific needs of decision makers
external to the organization such as stockholders, suppliers, banks, and government agencies.

1. The Nature of Accounting

Accounting organizes and summarizes economic information so that decision makers can
use it. The information is presented in reports called financial statements. To pre- pare these
statements, accountants analyze, record, quantify, accumulate, summarize, classify, report,
and interpret economic events and their financial effects on the organization.

The series of steps involved in initially recording information and converting it into
financial statements is called the accounting system. Accountants analyze the information
needed by managers and other decision makers and create the accounting system that best
meets those needs. Bookkeepers and computers then perform the routine tasks of
collecting and compiling economic information. The real value of any accounting system
lies in the information it provides.

- Accounting as an aid to decision making

- Financial and management accounting

2. The Balance Sheet

One of the major financial statements prepared by the accounting system is the balance
sheet, which shows the financial status of a company at a particular instant in time. The
balance sheet has two counterbalancing sections. Although balance sheet is a widely used
term, it is not as descriptive as its newer sub- stitute terms: statement of financial position or
statement of financial condition. Nevertheless, old terms die hard, so balance sheet is used in
 this book

3. The Balance Sheet Transaction

Balance sheets are affected by every transaction that a company, or an entity, has. An
entity is an organization or a section of an organization that stands apart from other
organizations and individuals as a separate economic unit. A transaction is any event that
both affects the financial position of an entity and can be reliably recorded in money terms.

- Transaction Analysis

- Sole Proprietorship

- Partnership

- Corporation

- A note on Nonprofit Organizations

- Advantage and Diadvantages of Corporate Form

- Accounting for Owners Equity

4. Stockholders and The Board of Directors

In partnerships, the managerial tasks may be shared by the owners. In corporations, the
ultimate responsibility for management is delegated by the stockholders to the board of
directors. An advantage of the corporate form of organization is that it separates ownership
and management. Stockholders invest resources but do not need to devote time to managing,
and managers can be selected for their managerial skills, not their ability to invest large sums
in the firm.

5. Crediblity and the Role of Auditing

One way to solve this credibility problem is to introduce an honorable, expert third party. In
the area of financial statements this third party is called the auditor. The auditor examines the
information that managers use to prepare the financial statements and provides assurances about
the credibility of those statements.
- The certified public accountant
- The Auditors Opinion
6. The Accounting Profession
Public accountants are those whose ser- vices are offered to the general public on a fee
basis. Such services include auditing, preparing income taxes, and management consulting.
All other accountants would be private accountants.
- Public accountant firms
- Professional ethics