Accounting
and Business Transactions
- "We need some rules here…"
Accounting
is the language of business. The rules by which companies are accounted
for are called Generally Accepted Accounting Principles or GAAP
("gap" as it is called). Students who continue in accounting and make
it a career may take the two-day exam to become a Certified Public Accountant
or CPA. CPAs are needed to verify that the financial reports of business
enterprises are prepared free of material misstatements. In order to protect
their financial resources, parties such as current and prospective investors,
institutions that finance these enterprises such as banks, and
various governmental units with whom the enterprise performs services
or provides goods must have a standard by which all businesses
can be evaluated and compared. GAAP has evolved for that purpose. Accountants
must analyze the enterprise's financial activities (transactions), record
them in journals and allocate (posting) them to accounts (ledger) all
according to these rules. The student must learn this language and then
operate within the logic of the rules. Practice, Practice, Practice …
Accountants work in three main arenas: Public, Private and Government.
Public Accounting involves practitioners who are independent of the clients
whose financials are being audited to verify GAAP. Private Accounting
involved professionals who compile the financial statements and are actual
employees of the enterprise. And the governmental area involves accountants
working as employees for federal, state, and local jurisdictions.
Site Content
- John Templeton, HCCS Accounting Instructor.
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