What is accounting?

The language of business.

A means to communicate financial information.

A way to convey information about a business to users.

Who uses accounting information?

Owners

Managers

Investors (including potential)

Analysts on their behalf

Creditors (including potential)

Government (tax assessment)

Regulators

Customers

Unit of measure

In order for accounting to present information that is useful, it must be able to

express things in a common unit of measure
Accounting cycle
Transaction or event occurs
Could simply be the passage of time.
Recorded in the Journal using a Journal Entry.
event is translated into accounting language.
Journal is posted to Ledger
the information from all the journal entries in the period is aggregated.
Ledger accounts are totalled.
Financial statements are prepared.