What is Accounting

The Three Activities of Accounting

Accounting consists of three basic activities :

Identifies - select economic events

Records - also classify and summarize
Communicates - prepare accounting reports and analysis

The economic events of an organization to interested users

The Accounting Process includes bookkeeping function

Who uses accounting data ?

Internal users :

Internal Users Purpose for Financial Statements

Marketing Budget allocation, ROI analysis
Management Decision-making, performance evaluation
Finance Cash flow management, financial planning
HR Salary budgeting, employee benefits planning

External users :

External Users Purpose for Financial Statements

Investors Assessing company's profitability and growth prospects
Creditors Evaluating the company's creditworthiness
Traders Making informed investment decisions

Next section : The building blocks of Accounting