Chapter 1 - Accounting : The Language of Business

2) Identify career opportunities in accounting.

- Accounting clerk positions usually require one to two accounting courses and little or no experience. - Bookkeeper positions usually require one to two years of accounting education plus experience as an accounting clerk. - Accountant positions (CPAs) usually require a bachelor's degree.

Types of Accounting

- Public Accounting - Managerial Accounting -Governmental Accounting

4) Compare and contrast the three types of business entities.

-A sole proprietorship is owned by one person. The owner is legally responsible for the debts and taxes of the business. -A partnership is owned by two or more people. The owners are legally responsible for the debts and taxes of the business. -A corporation is a separate legal entity from its owners.

5) Describe the process used to develop generally accepted accounting principles.

1) Discussion memo 2) Exposure Draft 3) Statement of Principle

Exposure Draft

A propose solution to a problem being considered by the FASB

Public Accounting

Accountants work for public accounting firms. Public accounting firms provide accounting services for other companies. Offering three services: -Auditing -Tax Accounting -Management Advisory Services

1) Define accounting

Accounting is the process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated to owners, managers, and other interested parties. Accurate accounting information is essential for making business decisions.

3) Identify the users of financial information

All types of businesses need and use financial information. Users of financial information include owners and managers, employees, suppliers, banks, tax authorities, regulatory agencies, and investors. Nonprofit organizations need similar financial information.

Discussion Memo

An explanation of topic under consideration by the FASB

CPA

Certified Public Accountant

Statements of Financial Accounting Standards

Established principles

FASB

Financial Accounting Standards Board

Managerial Accounting

also referred to as private accounting, involves working for a single business in industry. Managerial accountants perform a wide range of activities, including: -establishing accounting policies -managing accounting systems -preparing financial statements -interpreting financial information providing financial advice -preparing tax forms performing tax planning services preparing internal reports

GAAP

generall accepted accounting principles

Management Advisory Services

involve helping clients improve their information systems or their business performance.

Governmental Accounting

involves keeping financial records and preparing financial reports as part of the staff of federal, state, or local governmental units. Governmental units do not earn profits. However, governmental units receive and pay out huge amounts of money and need procedures for recording and managing this money.

Tax Accounting

involves tax compliance and tax planning. Tax compliance deals with the preparation of tax returns and the audit of those returns. Tax planning involves giving advice to clients on how to structure their financial affairs in order to reduce their tax liability.

Auditing

the review of financial statements to assess their fairness and adherence to generally accepted accounting principles. Accountants who are CPAs perform financial audits.