Accounting Lecture 1(1)[1]

Accounting Lecture 1(1)[1] - Accounting? What Is It? In all...

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Accounting? What Is It? In all of our personal lives we have goals. Most of you probably have set as a goal the achieving of a bachelor’s degree. You might also want to save enough money to take a vacation or buy a new car. These goals would probably be in addition to your goals of food, clothing, and shelter for yourself and your family. Of course your spouse has his or her own goals as well. Others in your family may have goals as well. Many of these goals can be stated in terms of money . For example the new car you want may cost $25,000. The vacation for the family may cost $2,500. Now in my experience I never have enough cash to achieve all my goals at once. I have to prioritize my goals; plan to achieve them; and act in a way to achieve them. I must check my income to see what I have coming in to my family treasury. I check my expenses to determine what is leaving the family treasury and which of those expenses is required and which is not. I don’t really have control over my mortgage payment, but I may be able to trim my food bill by eating out less often. Once I have a plan on how to save the money and begin to act, I will have a number of ways to check and see how my plans are progressing. I could check my expenses by examining my check register. I could see how my savings is increasing or decreasing by checking the bank statements I receive from my bank. Your company or the organization that you work for behaves in much the same way. There is an increased complexity, but the behavior is much the same. Goals are set; plans are made and executed; reports are generated. As time passes the results of the plans are measured against results. Have we made progress or are we regressing? If we are regressing is there a way to fix this problem? If we are progressing is there a way to increase this progress? This is very much the way Accounting operates. Accounting is a process of identifying, recording, and communicating to its customers information about the economic events that have affected the organization. Also a part of the accounting function is analyzing and interpreting the communicated information. Here we look to achieve an understanding of how these events impact the organization’s goals. Now it should be remembered that accounting is dealing with goals stated in terms of money. I may have a goal to be a good person. My corporation may have as a goal to be a good employer. Neither of these goals is stated in terms of money, and, therefore, would not be addressed using the techniques of Accounting. Now if for me being a good person means that I tithe to a church or charity, I now have stated my goal in a way that can be measured in money. I can use Accounting techniques to measure my progress to that goal. Similarly if being a good employer means providing all employees with excellent health coverage, the
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Accounting Lecture 1(1)[1] - Accounting? What Is It? In all...

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