ACC pg 1-2
What is accounting?
Accounting is the process of identifying, measuring, recording and communicating the economic events of an organization to interested users of the information so that decisions can be made.
Economic events
An economic event is a business transaction.
Economic events are recorded; examples include receipts, contracts, and bills/invoices.
Interested users of financial information
Internal users (inside the company):
Data analyst
Accountant
CEOs/officers/managers
Human Resources
Marketing
External users (outside the company):
Banks (loans)
Government (IRS)
Stockholders/Shareholders
Customers
Suppliers
Potential Employees
The accounting process as the link to decisions
Accounting links economic events to interested users to help make decisions.
The accounting process: steps to identify, measure, record, and communicate information
Steps in the accounting process
A. Identifying transactions that impact financial statements
Financial statements primarily include assets, liabilities, and equity.
B. Measuring
Transactions are measured in dollars: .
C. Recording
Recording involves maintaining a chronological list of measured events.
D. Communicating
Preparing reports
Analyzing/interpreting information from receipts
Providing information to users