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Describe for the Students the Primary Objectives of Accounting

Autor:   •  December 3, 2013  •  Research Paper  •  924 Words (4 Pages)  •  1,104 Views

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Accounting

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Describe for the students the primary objectives of accounting

There are several objectives of accounting that students need to be aware of. First, as a process, accounting performs the service of providing quantitative, financial information that helps the users of the information in better decision making for their businesses. Second, accounting analyses and describes the collected data of businesses through measuring, classifying, and summarizing information, and reduces the data into statements and reports, which show the results and financial stand/ situation of the operations of that business. As a tool of information, an accounting system collects data in the form of processes and passes this information about the business to the right users so they can make decisions that best suit the business (Rajasekaran & Lalitha, 2011). Therefore, the basic objective for accounting is to provide necessary information, especially, for external users in the form of financial statements, such as profit and loss statements and balance sheets, so they can make business decisions based on this basic information. The internal users can also use the basic information provided by accounting systems to make decisions for the business. Such users are directors, officers, supervisors, managers, and staff members. Thus, the primary objectives of accounting can be summarized as: to depict the financial position of a business, for maintenance of records of business transactions in an organization, to calculate profit or loss of the organization's business, and to provide information to various users of the organization (Rajasekaran & Lalitha, 2011).

Explain the basic terminology of the accounting process or financial reporting.

Debit and credit

A debit is value transaction that is added to an account. On the other hand, a credit is a transaction where value is deducted from an account. For example, in an individual's checking account, a written check is a credit while a cash or check deposit into the account is a debit. This is a simple, practical example. However, the debit and credit accounts depend on the account type on which one is working (Rajasekaran & Lalitha, 2011).

Accounts

As discussed under the objectives of accounting, accounts are records of data and information for individual or business transactions on particular goods or services. All accounts are recorded in a general ledger. However, in the present accounting world, the general ledger books have been replaced by computerized accounting systems that create computerized

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