Accounting 110 Chapter 1

Areas of Accountants

1. Public Accounting 2. Managerial Accounting 3. Governmental Accounting

Private Corporations

Also called closed held corporations. Ownership of privately owned corporations is limited to specific individuals usually family members. Not traded in an open exchange.

Management Advisory Services

Involves helping clients improve their info systems or their business performance.

Tax Accounting

Involves tax compliance and tax planning.

Accounting

The process by which financial info about a business is recorded, classified, summarized, interpreted, and communicated to owners, managers, and other interested parties

Managerial Accounting

also referred to as private accounting, involves working for a single business in industry.

Bookkeepers

are generally responsible for recording business transactions and sometimes supervise the work of accounting clerks. Usually require one to two years of accounting education plus experience as an accounting clerk.

Social Entity

are nonprofit organizations, such as cities, public schools and public hospitals.

Stockholders

are not personally responsible for the debts or taxes of a corporation. If the corporation is unable to pay its debts, the most the stockholders lose is their investment

Accountants

are responsible for keeping records and providing financial info about the business. Usually require a bachelor's degree, both education and experience are required for accountant positions.

Accounting Clerks

are responsible for record keeping for a part of the accounting system. Usually require one to two accounting courses and little to no experience.

Auditors Report

contains the auditor's opinion about the fair presentation of the operating results and financial of the business

Separate Entity Assumption

describes the concept of keeping the firm's financial records separate from the owner's personal financial records.

Governmental Accounting

involves keeping financial records and preparing financial reports as part of the staff of federal, state, or local government units.

Sole Proprietorship

is a business entity owned by one person. That one person is responsible for the debts and taxes of that business

Partnership

is a business entity owned by two or more people. They enter in a contract that details each partners rights, obligations and limitations

Corporation

is a business entity that is separate from its owners. A corporation has legal right to own property and do business in its own name.

Accounting System

is designed to accumulate data about a firm's financial affairs,, classify the data in a meaningful way, and summarize it in periodic reports called financial statements.

Entity

is recognized as having its own separate identity. It may be an individual, a town, a university, or a business.

Auditing

is the review of financial statements to assess their fairness and adherence to generally accepted accounting principles.

International Accounting

is the study of the accounting principles used by different countries.

Stock

issued in the form of stock certificates, represents the ownership of the corporation. Can be private or publically owned

Creditors

those people, companies, or government agencies to whom the business owes money

Economic Entity

usually refers to a business or organization whose major purpose is to produce a profit for its owners

Public Accountants

work for public accounting firms that provide accounting services for other companies. Usually offer three services: Auditing, tax accounting, and management advisory services.