Accounting

 Information and measurement system that identifies,

records, and communicates relevant information about
a company’s business activities.

 An information that measures, processes, and

communicates financial information about an
enterprise.
Importance of Accounting:

 It helps to track income and expenditures

 Helps to provide investors, managers, government with
quantitative financial information, which can be used in
making business decisions
 Helps to assess opportunities , products, investments,
social and community responsibilities
Accounting Activities

 Identifying – business activities requires selecting

transactions and events relevant to an organization.
- Select transactions and events
 Recording – business activities requires keeping a
chronological log of transactions and events measured
in dollars - classified and summarized in a useful
format.

- Input, measure and classify

 Communicating – business activities requires preparing
accounting reports such as financial statements.

 - Prepare, analyze and interpret

 Case study: Decision Point
McDonald’s Corporation

 Top management of McDonald’s – state in the

McDonald’s 1995 Annual Report that they have an
established growth strategy of improving customer
satisfaction, increasing market share, and enhancing
profitability and returns. Their vision is to dominate the
global the global food service industry by adopting
strategies designed “ … to create financial success – for
the company, for franchisees, for partners, for suppliers
and ultimately, for shareholder”.
 What financial knowledge do the company’s managers
need to promote these goals?
Contact with:

 Credit approvals
 Checking accounts
 Tax forms
 Payroll
Recordkeeping

 -part of accounting that involves recording transactions

and events, either manually or electronically; also
called bookkeeping.
Technology -

Is a key part of modern business and plays a major role in

accounting.
 - reduces the time
 -effort
 -cost of recordkeeping
Users of Accounting
Information
 External users
 Lenders
 Shareholders
 Governments
 External auditors
 Customers
 Internal users
 Officers
 Managers
 Internal auditors
 Sales staff
 Budget officers
 Controllers
Accounting Jobs by Area

Private Public Government

Accounting specialists are highly regarded.
Their professional standing often is
denoted by a certificate:

 CPA – Certified Public Accountants

 CMA – Certified Management Accounting
 CIA – Certified Internal Auditor
 CB - Certified Bookkeeper
 CPP – Certified Payroll Professional
 PFS – Personal Financial Specialist
 CFE – Certified Fraud Examiner
 CrFA – Certified Forensic Accountant
Questions to discuss:

 1. What is the purpose of accounting?

 2. What is the relation between accounting and
recordkeeping?
 3. Identify some advantages of technology for
accounting
 4. Who are the internal and external users of accounting
information?
 5. Identify at least five types managers who are internal
users of accounting information.
 What are internal controls and why are they important?