Accounting and the Business Environment

Introduction

• Objective: Understand why accounting is important and who uses accounting information.

Definition of Accounting

• Accounting: An information system that:
  • Measures business activities
  • Processes information into reports
  • Communicates results to decision-makers
• Known as the "language of business".

Importance of Accounting

• Helps in managing personal finances, becoming a good employee, or running a business.
• Dispels the myth of accounting being boring; involves varied activities:
  • Investigating financial evidence
  • Developing computer programs for accounting
  • Analyzing and explaining financial numbers

Users of Accounting Information

• External Users (Financial Accounting):
  • Investors: Determine investment potential.
  • Lenders/Creditor: Evaluate creditworthiness.
  • Government: Ensure proper tax payments.
• Internal Users (Managerial Accounting):
  • Managers/Employees: Make operational decisions.

Accounting Fields

• Financial Accounting: For external decision-makers.
• Managerial Accounting: For internal decision-makers.

Examples of Accounting Information Use

• Individuals: Manage personal finances.
• Businesses: Set goals, measure progress.
• Investors: Choose investment opportunities.
• Creditors: Assess a company’s financial health.
• Tax Authorities: Verify tax compliance.

Career Opportunities in Accounting

• Public Accounting: Working with accounting firms (auditing, tax preparation).
  • Examples: Deloitte, PwC, Ernst & Young, KPMG (Big Four).
• Private Accounting: For individual companies, focusing on budgeting, forecasting.
• Governmental Accounting: Working for government agencies like IRS or FBI.

Accounting Certifications

• CPA (Certified Public Accountant):
  • Requires educational and experience requirements, passing a 4-part exam.
  • Generally earns 10-15% more than non-certified accountants.
• CMA (Certified Management Accountant):
  • Specializes in accounting and financial management.
  • Works for single companies.

Various Accounting Positions & Salaries (Based on 2016 Guide)

• Controllers: $83,000 - $234,000
• Financial Analysts: $48,000 - $136,000
• Business Systems Analysts: $46,000 - $131,000
• Tax Accountants: $48,000 - $135,000
• Auditors: $48,000 - $141,000
• Cost Accountants: $46,000 - $121,000
• Bookkeepers: $43,000 - $63,000

Conclusion

• Accounting offers diverse career paths in public, private, and governmental sectors.
• Essential for effective business operation and personal financial management.