Accounting Basics

A. Users of Accounting Information

• Individuals – to manage bank accounts, evaluate job prospects, make investments, and decisions.
• Businesses – to set goals, evaluate their progress, decide which building or equipment to purchase.
• Investors and Creditors – to decide whether to start a new venture, evaluate what income they expect on their investment, analyze a company’s financial statement.

B. The Accounting Profession

• Public Accountants
• Serve the general public
• Work includes auditing, income tax planning and preparation, management consulting
• Public Accountants are about 10% of all accountants.

• Private Accountants
• Work for a single business.
• Examples are restaurants, charitable organizations, educational institutions, and government agencies

C. Accounting Organizations and Designations

• American Institute of Certified Public Accountants (AICPA)
• The national professional organization of CPA’s.
• AICPA prepares and grades the CPA examination.
• Publishes monthly journal, the Journal of Accountancy.
• Financial Accounting Standards Board (FASB)
• Formulates generally accepted accounting principals (GAAP).
• These principles establish accounting guidelines.
• Institute of Management Accountants (IMA)
• Formerly the National Association of Accountants (NAA). Focus on the practice of management accounting.
• Certifications
• Certified Public Accountant (CPA)
• Certified Management Accountant (CMA)
• Certified Internal Auditor (CIA)