Accounting Basics

What is accounting?

How your business records, organizes, and understands its financial information

How is accounting different bookkeeping?

Bookkeeping is more concerned with recording everyday financial transactions and operations, while accounting puts that financial data to good use through analysis, strategy, and tax planning.

What is financial accounting?

Preparing the company's annual financial statements that people outside the company can use

What is managerial accounting?

Produce reports that provide regular updates on company's financial health and help you interpret those reports

What is tax accounting?

Designed to make sure that you don't pay more income tax than you're legally required by the IRS

What is cost accounting?

Analyzing all costs associated with producing an output in order to make better decisions about pricing, spending, and inventory

How is cost accounting related to managerial accounting?

It's prerequisite of managerial accounting because managers use cost accounting reports to make better business decisions

How is cost accounting related to financial accounting?

Costing data is often required when compiling a balance sheet

What are the 4 main financial statements?

balance sheets, income statements, cash flow statements, statements of shareholders' equity

What is the purpose of a balance sheet?

Shows what a company owns and what it owes at a fixed point in time

What is the purpose of an income statement?

Shows how much money a company made and spent over a period of time

What is the purpose of a cash flow statement?

Shows the exchange of money between a company and the outside world over a period of time

What is the purpose of a statement of shareholders' equity?

Shows changes in the interests of the company's shareholders over time

What is an example of public accounting service?

tax work including the preparation of income tax returns, estate, and tax planning

What are the account type and structure differences between a public accountant and a corporate accountant?

public accountant will work for a public accounting firm

corporate accountant work in accounting functions of companies that produce goods and services

What are the accounting work life differences between a public accountant and a corporate accountant?

Corporate accounting work long hours around the monthly close period

Public accounting works long hours during the "busy season" of their clients

What are the breadth vs depth differences between a public accountant and a corporate accountant?

Corporate accountants are knowledgable about the company they work for

Public accountants serve many clients which gives them knowledge of different companies

What are the stability of jobs differences between a public accountant and a corporate accountant?

Public accountant can serve a different client each week or even travel to different client sites in the same day

Corporate accountants work for the same employer all year

What are 5 government finance careers?

IRS auditor, accountant, treasury enforcement agency, certified public accountant, financial manager

What is a controller?

oversees the accounting operations of a company