Essay, Research Paper: What Is Accounting?

Today I am going to be talking about accounting. There are many different
subjects that can be talked about in accounting. I am only telling you the two subjects that
I think are most important. I chose what is accounting and who uses accounting
information.
What is Accounting? Many people might define it as hard or boring, but of course
that is wrong, so here is the right answer. Accounting is the art of organizing, maintaining,
recording, and analyzing financial activities. Accounting is generally known as the
“language of business.” The accountant translates this accounting information into
meaningful terms that are used b interested parties. They also provide information that
helps you produce goods or services as efficiently as possible to maximize profits and keep
costs low. Every organization, whether organized for profit, nonprofit, charitable,
religious, or governmental purposes requires accountants.
Accounting may be divided into three areas: (1) public accounting, (2) private
accounting, and (3) governmental accounting. The public accountant, usually an
employee of a CPA firm, is employees as an independent contractor by a business to
perform an auditing function: to review the accounting system used by the business, check
the correctness of financial statements, and give an opinion. The public accountant also
prepares income tax returns and provides management advisory services. The private
accountant, usually employees by a business, records business activities and prepares
periodic financial statements. The governmental accountant performs the same functions
as a private accountant, but is employed by a federal, state, or local governmental agency.
Who uses accounting information? Well all decision-makers need different kinds
of information to make their decisions. The more complex the decision, the more accurate
the information must be. In the world of business, accounting plays an important role in
these various decision-making processes.
So you are wondering who these individuals and groups are that use accounting?
They are as diverse as business itself. They include anyone or any group that plans to
interact with a particular business.
Individuals like us use accounting information all the time to make such decisions
as:
Investing in the stock market
Applying for a loan to purchase a home
Evaluating potential jobs
Whether to make, buy, or rent various goods
Mangers within a business use accounting information daily to make marketing,
production, sales, research and development, and other decisions. Without the proper
accounting information these types of decisions would become very difficult, if not
impossible, to make.
Banks use accounting information to make decisions about granting loans to
individuals and companies. The loan process cannot even begin without the proper
accounting information being submitted by a company or an individual.
Government agencies, such as the Internal Revenue Service, the Securities,
Exchange Commission, the Federal Trade Commission, and so on, base their regulation
enforcement and compliance on the accounting information they receive.
Not-for-profit organizations use accounting information just as profit-oriented
businesses do. This information is used in the areas of budgeting, payroll, and reporting to
outside entities.
As the economy becomes more complex, so do the transactions within a business.
As these transactions become more complex, so does the process of reporting them to
various users, and making them understandable for their decision making process.
Now you can see why I chose these two subjects. The purpose of accounting is
to provide information that you can use to increase your chance of making correct
financial decision. Also you can see that accounting is used by everyone. I hope that this
clears up any questions that anyone has had about what accounting is and who uses i


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