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1、ENGLISH TEXTBOOK FOR ACCOUNTANTS 1 LESSON ONE ACCOUNTING: AN INFORMATION SYSTEM Accounting is an information system necessitated by the great complexity of modern business. One of the most important functions of accounting is to accumulate and report financial information that shows an organizations
2、 financial position and the results of its operations to its interested users. These users include managers, stockholders, banks and other creditors, governmental agencies, investment advisors, and the general public. For example, stockholders must have an organizations financial information in orde
3、r to measure its managements performance and to evaluate their own holdings. Banks and other creditors must consider the financial strength of a business before permitting it to borrow funds. Potential investors need financial data in order to compare prospective investments. Also, many laws require
4、 that extensive financial information be reported to the various levels of government. Businesses usually publish such reports at least annually. To meet the needs of the external users, a framework of accounting standards, principles and procedures known as “generally accepted accounting principles
5、” have been developed to insure the relevance and reliability of the accounting information contained in these external financial reports. The subdivision of the accounting process that produces these external reports is referred to as financial accounting. Another important function of accounting i
6、s to provide the management inside an organization with the accounting information needed in the organizations internal decision-marking, which relates to planning, control, and evaluation within an organization. For example, budgets are prepared under the directions of a companys controller on an a
7、nnual basis and express the desires and goals of the companys management. A performance report is supplied to help a manager focus his attention on problems or opportunities that might otherwise go unnoticed. Furthermore, cost-benefit data will be needed by a companys management in deciding among th
8、e alternatives of reducing prices, increasing advertising, or doing both in attempt to maintain its market shares. The process of generating and analyzing such accounting information for internal decision-making is often referred to as managerial accounting and the related information reports being
9、prepared are called internal management reports. As contrasted with financial accounting, a managerial accounting information system provides both historical and estimated information that is relevant to the specific plans on more frequent basis. And managerial accounting is not governed by generall
10、y accepted accounting principles. The growth of organizations, changes in technology, government regulation, and the globalization of economy during the twentieth century have spurred the development of accounting. As a result, a number of specialized fields of accounting have evolved in addition to
11、 financial accounting and managerial accounting, which include auditing, cost accounting, tax accounting, budgetary accounting, governmental and not-for-profit accounting, human resources accounting, environmental accounting, social accounting, international accounting, etc. For example, tax account
12、ing encompasses the preparation of tax returns and the consideration of the tax consequences of proposed business transactions or alternative courses of action. Governmental and not-for-profit accounting specializes in recording and reporting the transactions of various governmental units and other
13、not-for-profit organizations. International accounting is concerned with the special problems associated with the international trade of multinational business organizations. All forms of accounting, in the end, provide information to the related users and help them make decisions. ENGLISH TEXTBOOK
14、FOR ACCOUNTANTS 2 Reading Material (1) Generally Accepted Accounting Principles Financial accounting relies on certain standards or guides that have useful over the years in imparting economic data. These standards are called generally accepted accounting principles. They are closely related to expe
15、rience and practice and may change over time. Various terms, such as principle, standard, assumption, convention, and concept, are often used to describe such guides. The most fundamental concepts underlying the accounting process are: Accounting Entity. Each business venture is a separate unit, acc
16、ounted for separately. Going Concern. The assumption is made in accounting that a business will continue indefinitely. Measuring Unit. Conventional accounting statements are not adjusted for changes in the value of the dollar. Accounting Period. Accounting reports are related to specific time periods, typically one year. Historical Cost. Assets are reported at acquisition price and are not adjusted upward. Objectivity. Whenever possible, accounting entries must be based on objectively det
