Purpose of Accounting

In: Business and Management

Submitted By jerodbell
Words 738
Pages 3
u Running head: Accounting

Understanding Accounting and Financial Statements
23 September 2010
ACC 280/ Michael Pagano
Understanding Accounting and Financial Statements Businesses can be impressive institutions. There are many factors that are combined to make a successful business. These businesses usually have strict code of conducts and ethics that guide the company in its daily practices. Some areas of the business receive more attention than others. One department that receives constant attention is the accounting or finance department. This is a department that is responsible for many aspects of the business. This department gives managers and employees the monetary status of the company enabling them to make important decisions to guide the company. It is important that individuals are able to understand basics of accounting and the four basic financial statements.
Purpose of Accounting Accounting serves many important functions in a business. First an individual needs to have a basic understand of accounting. Accounting consists of three very basic activities which are identifies, records, and communicates financial information within a given period. The first activity is to identify events relevant to the company during that time period. Accounting also records events in order to provide history of its financial activities. This activity of records must be systematic and in chronologically. The last major activity that accounting demonstrates is the ability to communicate information of accounting reports. With accounting giving this vital information to an individual it is important that the individual is able to analyze and interpret the information that is given. To be able to interpret the information the individual will have to be capable to explain the uses, meaning, and limitations of the data. When analyzing the information the…...

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