ACCOUNTING AND ACCOUNTANT’S WORK

Accounting can be defined as the process of recording, classifying, summarizing,

reporting, and interpreting the financial data of an organization. The business transaction of
company must be recorded, classified and summarized systematically.
As an information system, accounting provides monetary information about the financial
position of a business firm and the results of its operation and the interpretation for use by
management and outsiders.
In today’s business, there are many persons and agencies who are economically involved
in organization. The first group is management of an organization who are responsible for the
planning, organizing, controlling, and directing the operation of the organization. The second
group is the stockholders who wish to require financial information in order to measure the
management’s performance. Potential investors also need information about the financial
position and the prospect of the organization. The third group are creditors and bankers who
must consider the financial strength of an organization before granting credit. Finally, many laws
require that extensive financial information can be reported to the various level of government.
So as an information system, the accounting process serves both persons inside and outside an
organization.
The information provided by the accounting data should be reported and interpreted
accurately for use in decision-making. The field of accounting concern with the recording of
business transactions of a company and with the periodic preparation and report of the financial
position and the result of its operation in monetary terms is called financial accounting. This
financial information is intended for both the person inside and outside the company.
Management accounting is primarily concerned with the report of financial information
in order to aid management in the planning and controlling of business operations and to serve as
a decision making.
Cost accounting is primarily concerned with the cost of manufacturing product with
specials emphasis on the determination and control of costs. It gives particular attention of the
cot distribution.
Closely related to the study of accounting is auditing. Auditing is a systematic
examination of the records and the financial document of a business to determine the accuracy of
the recording business transaction and to verify the financial statements and reports of the period.
The audit is conducted by an independent public account called an auditor. The organization
may also employ its own staff of auditors, known as internal auditors.
A public accountant offers his services to the public rather than to one organization. His
work often involves giving advice to business about investment or taxes. He may also help
individuals in preparing their income tax return. Most public accountants try to become C.P.A.
(Certified Public Accountants). This certificate is the mark for the expert competence in the
accounting field and is required in order to verify financial statements.
 The industrial accountant is employed by a business firm. He keeps the records and
makes the reports on which managers of business rely in planning the operations of the business.
Government accountants hold important positions at all levels of central and local
government. Their duties are often similar to those of public and industrial accountants.
Tax accountants keep tax record and prepare report that must be sent to government tax
agencies. They also advice management about taxes that the company may have to pay as a
result of business transactions.
Cost accountant deals with costs involved in all operations of a business. These may be
the cost of product, a service, a manufacturing process, or the operating expenses of a
business. The information provided by the cost accountants helps in the management to budget
the company’s money and to plan its future operations.
Managerial accountants are other specialists within the broad area of private
accounting. In particular they work with the kinds of financial reports necessary to management
for the efficient operation of the company, including budgets, and cash flow projections.
Many people have chosen accounting as a profession because of its many advantages.
Public accountants now enjoy professional status similar to that of doctors or lawyers.

A. Comprehension Questions
1. What is accounting?
2. Who are users of accounting information?
3. Describe management accounting and financial accounting?
4. What is accounting information used for?
5. What are internal and external auditors?

B. State each of the following statements it is TRUE or FALSE according to the

reading!
....... 1. The accounting information is useful for decision-making.
…... 2. Accounting provides marketing information of a business.
….. 3. Auditing is a systematic verification of the recording and the financial
documents.
…… 4. Creditors are those who commit money to a firm in order to earn a financial
return.
…… 5. Investors are those to whom money is owed.
…… 6. The accounting process serves the persons inside the organization only.
…… 7. The results of a company’s operation must all be recorded in monetary terms.
…… 8. In the United States a C. P. A. certificate is required in order to verify
financial documents.
…… 9. Tax accountants work both for government and individuals.
……10. A review of the financial records of an organization by an accountant is called
an auditor.
……11. Cost accountants give advice about investment and income tax return.
 …… 12. Managerial accounting deals with budgets and cash flow projection.
……13. A C. P. A. is considered a professional nowadays like a doctor.
……14. External auditors are independent public accountant who review the financial
records of a company.
……15. Bankers and stockholders do not usually need financial information of their
company.

C. Vocabulary Review
Match the synonym of the following word/phrases

Words / Phrases Their Synonyms Answers

1. classification a. precisely 1.
2. provide (v) b. a company 2.
3. required c. benefit 3.
4. independent d. organize into categories 4.
5. a business firm e. make available 5.
6. advantage f. free 6.
7. competence g. legal qualification 7.
8. accurately h. necessary 8.
9. concern with i. depend confidently 9.
10. rely (v) j. mainly 10.
11. primarily k. deals with 11.
12. aid l. help 12