Definition
Accounting is the system of maintaining records of a company’s operations and communicating that information to decision makers.
Accounting is the system of maintaining records of a company’s operations and communicating that information to decision makers.
Tools
Accounting uses financial statements, or periodic
reports published by the company for the purpose of providing information to
investors. The four financial statements commonly used include; Income Statement, Statement of Stockholders' Equity, Balance Sheet and Statement of Cash Flow. All of these statements build upon each other and are all required to determine the financial standing of a company.
Four main financial statements:
1.)
Income Statement
Revenues-expenses = Net income
2.)
Statement of Stockholder’s Equity
Net income – dividends = Stockholder equity
3.)
Balance Sheet
4.)
Statement
of Cash Flow
This last Financial statement takes Stockholders' Equity, Liabilities and Assets and organizes it into three categories which are Operating Activities, Investing Activities and Financing Activities. The point of this is to determine the ending amount of cash at the end of the reporting period.
Accounting Organizations
Generally Accepted Accounting Principles (GAAP) – Rules of
financial accounting
Financial Accounting Standards Board (FASB) – Establishes the
rules of financial accounting in the United States
International Accounting Standards Board (IASB) – Establishes the rules of accounting for all countries worldwide and is responsible for converging the accounting standards
Securities and Exchange Commission (SEC) – Requires companies that publicly trade stocks to prepare periodic financial statements for distribution to investors and creditors
Careers in Accounting
Public Accounting – Auditing, Tax Planner, or Business
Consultants
Private Accounting – Financial, Managerial, Budget analyst,
Internal auditors, Tax Planner, Payroll managers
Why to consider accounting?
Accounting is often considered the cornerstone of the economy because every business organization around the country will need accountants to manage financial issues. There is an anticipated 20% increase of newly hired accountants in the next decade and demand for accountants are at an all time high resulting in high starting salaries. One thing is for certain is that accountants will never be out of a job.
Accounting is often considered the cornerstone of the economy because every business organization around the country will need accountants to manage financial issues. There is an anticipated 20% increase of newly hired accountants in the next decade and demand for accountants are at an all time high resulting in high starting salaries. One thing is for certain is that accountants will never be out of a job.
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