Accounting IChapter 1

What is Accounting and Why Should you Learn it?Accounting Careers

Communication and Business Ethics

Chapter 1 - Objectives•What is Accounting and Why Should you Learn it?• Accounting Careers• Communication and Business Ethics

What is Accounting?• Planning, recording, analyzing, and

interpreting financial information. (It’s all about the $$$.)

• The planned process for providing useful financial information is called an accounting system.

• The organized summaries of the financial records of a business are called accounting records.

• “The language of business”page 5 of your text

Why is Accounting Important (or, why should you learn it?)

What do Uma Thurman, Ben Stiller, Billy Joel, Johnny Damon, and John Elway have in common?

Celebrities who lost money to financial advisors

Drag picture to placeholder or click icon to addhttps://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-

8#q=celebrities+who+lost+money+to+financial+advisors

Who is this man?

His name is Bernie Madoff. He stole $20 million and covered it up with false financial records.

People who lost money to Madoff include:

Steven Spielberg, John Malkovich, KevinBacon, and his wife, Kyra Sedgwick

Would these people have lost their

money if they understood

accounting?• We can’t know that – BUT the more you know

about your money, the more likely you are to hang on to it.

• Accounting is important no matter what career you want -- if you want to work for a large corporation, a non-profit, or even the government – they all have accounting systems and you need to understand financial reports and information.

• If you want to start your own business, understanding accounting is essential.

Accounting Careers• An accountant is someone who plans,

summarizes, analyzes, and interprets accounting and financial information

• Accounting firms provide audit, consulting, and tax management services

• Forensic accounting – investigative / white collar crimes

• Certified Public Accountants – “CPA” – in Michigan – must pass exam, work in public accounting for 2 years.

• Other Careers

Public v. Private1. Public accountants / public

accounting firms – the “Big 4”Provide accounting services to the public

2. Private accountants Employed by / provide services to only one business

How much do accountants earn?

• https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=how%20much%20do%20accountants%20make

Communication• Accounting records can provide you

with accurate information regarding financial activities• To use this information, managers and

accountants must be able to communicate it to others, even if others do not have accounting knowledge.• Communication skills are very

important

Ethics• Making the right decisions – principles that

guide you• Business ethics guide you in making

business decisions.• Factors that can lead to unethical decisions:

(1) too much emphasis on profits, (2) misplaced loyalty, (3) personal advancement, (4) expectation of not getting caught, (5) unethical business environment, and (6) unwillingness to take a stand

pages 12-13 of text

Actions will or may be unethical if:

• an action violates international, federal, state, or local laws

• an action violates company rules or standards OR professional standards.

• the action adversely affects customers, employees, the company, the community, or others

pages 13-14End of Chapter 1