acct205ip1 - Running head: UNIT 1 INDIVIDUAL PROJECT Unit 1...

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Running head: UNIT 1 INDIVIDUAL PROJECT 1 Unit 1 Individual Project – Accounting Career Fair <name removed to preserve anonymity> AIU Online
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UNIT 1 INDIVIDUAL PROJECT The Primary Accounting Objectives Before explaining the primary objectives of Accounting, it is first important to ensure that you correctly understand what the definition of Accounting is. “Accounting is the entire system of rules, theories, and concepts that guides how business transactions and other economic events are measured, recognized, and reported to decision makers.” (AIU Online, 2011). From this definition, Accounting tasks can then be separated into the three main categories: Custodial accounting, Performance Accounting, and Decision Accounting (Harrowell, 1968). Custodial accounting is the financial accounting for company owned assets. This category would cover tasks such as annual financial account preparation for shareholders, other general report preparation for shareholders, Government entities, and creditors. Additionally, Custodial accounting also encompasses the preparation of tax returns (Harrowell, 1968). Performance accounting is the measure of actual performance of a company versus planned performance of a company. Costing and budgeting statistical records to provide to management are also important aspects of Performance accounting. Finally, periodic internal reports that are provided to management make up the final area of Performance accounting Harrowell, 1968). Decision accounting’s goal is to assist management in making a decision between alternate courses of action. Activities such as whether to make or buy a product or asset, to maximization or keep reasonable profit targets, or to seek alternative methods of production and inventory policy are all vital business areas that Decision accounting would be utilized in (Harrowell, 1968). Now having a firm understanding of the three main categories of Accounting task, you are able to understand the main objective of accounting, which to provide the information which 2
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UNIT 1 INDIVIDUAL PROJECT facilitate decision making to decision makers (AIU Online, 2011). Now, understanding the definition of the main objective of accounting, you can understand why first grasping the three main categories of accounting is important first, since these categories deal with splitting up the tasks related to providing the information needed to decision makers. Basic Accounting Terminology in Financial Reporting and the Accounting Process
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acct205ip1 - Running head: UNIT 1 INDIVIDUAL PROJECT Unit 1...

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