The field of accounting

CHAPTER I

ACCOUNTING AS A CAREER. THE BASIC ACCOUNTING CONCEPTS

The chapter describes the purpose and objectives of accounting.

After studying this unit you should be able to:

1. Define terminology related to accounting and bookkeeping.
2. Enumerate the stages of the accounting system.
3. Explain the difference between managerial and financial accounting, external and internal users.
4. Identify the differences in the work tasks of different accounting workers.
5. Understand the generally accepted accounting concepts.

Active vocabulary:

accountability – підзвітність, фінансова відповідальність

assessment – оцінка

caption – заголовок

consistent – послідовний

disclosure – розкриття інформації

going concern – концепція безперервності

interpreting – тлумачення

materiality – суттєвість

objective evidence – об’єктивний доказ

personal belongings – особисті речі

prudence – обачність

receipt – квитанція

relevant information – доречна, актуальна інформація

sales slip – товарний чек

sundry – різне

to keep records – вести бухгалтерський облік

to supplement – доповнювати

transaction – ділова операція.

Text A

THE FIELD OF ACCOUNTING

What is accounting? Accounting is the process of identifying, measuring, interpreting financial activity. Many people think of accounting as a highly technical field which can be understood only by professional accountants. Actually, nearly everyone practices accounting in one form or another on an almost daily basis. Whether you are preparing a household budget, balancing you cheque book, preparing you income tax return, or running a company, you are working with accounting concepts and accounting information.

Accounting has often been called the “language of business”. Since a language is a means of social communication, it is logical that a language should reflect changes in our environment, our life-styles, and our technology. Accounting, too, is a means of social communication in which changes and improvements are continually being made in order to communicate business information more efficiently.

We live in era of accountability. Although accounting has made its most dramatic progress in the field of business, the accounting function is vital to every unit in our society. An individual must account for his or her income, and must file income tax returns. Often an individual must supply personal accounting information in order to buy a car or home, to qualify for a college scholarship, to secure a credit card, or to obtain a bank loan.

Large corporations are accountable to their shareholders, to government agencies, and to the public. The state and local government, the school districts: all must use accounting as a basis for controlling their resources and measuring their accomplishments. Accounting is equally essential to the successful operation of a business, a university, a social program, or a city.

In every election the voters must make decisions at the ballot box on issues involving accounting concepts; therefore, some knowledge of accounting is needed by all citizens if they are to act intelligently in meeting the challenges of our society.