What is Accounting?
Accounting is the language of business. But what does that really mean for an individual or business owner?
Accounting is the information system that measures business activities, processes the information into reports, and communicates the results to decision makers.
The better you understand the language of business, the better you can manage your own business, be a valuable employee, or make wise investments.
The information produced by accountants is used by two sets of decision makers -- internal and external.
Financial accounting provides information for external decision makers likes investors, lenders, and government agencies.
Managerial accounting provides information for internal decision makers like the business' owners, managers, and employees.
Whether accounting information is for external or internal decision makers the overall goal remains the same -- provide a faithful representation of a businesses finances. A faithful representation is complete, neutral, and free from error.
