1.1: What Is Accounting

Question 1

What is Accounting?

Answer 1

The process of recording and summarizing financial information in a useful way.

Question 2

5 Main Accounting Activities

Answer 2

1. Gathering financial information about the activites of a business or other organization
2. Preparing and collecting permanent records. Records provide evidence of purchase, proof of payment, details of payroll and so on.
3. Rearranging, summarizing and classifying financial information into a more usable form.
4. Preparing information reports and summaries for the following purposes: a) to help management reach decisions, b) to serve the needs of groups outside the business such as bankers and investors and c) to measure the profitability of the business.
5. Establishing controls to promote accuracy and honesty among employees.

Question 3

What is Bookkeeping

Answer 3

Bookkeeping is the recording, posting and proving of the financial data. Bookkeeping takes place before accounting takes place

Question 4

What is Accounting as opposed to Bookkeeping?

Answer 4

Accounting is the establishing and maintaining of the entire accounting system, the interpreting of the results of the recorded data and the assisting in the management or decisions making aspects of the organization.

Question 5

What is The Language of Business

Answer 5

Business owners need to make good financial decisions based on accurate accounting records prepared, interpreted and analyzed by accountants.

Question 6

What 3 types of Accountants can you become in Canada?

Answer 6

a. Chartered Accountant (CA)
b. Certified General Accountant (CGA)
c. Certified Managament Accountant (CMA)

Question 7

What Do Public Accountants Do?

Answer 7

A public accountant serves the general public for a fee much like a doctor or lawyer does. Their main type of work is auditing. Auditing is the examining and testing of the books, records and procedures of a business in order to be able to express an opinion about its financial statements

Question 8

What do Professional Accountants do?

Answer 8

Professional accountant may choose industrial or institutional accounting rather than public accounting. Industrial accountants work for large companies such as Ford or Microsoft. Institutional accountants work for the government, banks, large insurance companies and similar organizations.