Accounting in Action

Why do we need Accounting?

Accounting is a universal discipline, necessary for all entities ( person or
organization), where there are financial activities.
Accounting is a service function.
Business and Accounting.
Business is a process of creation of values in the economy with the
objective to earn profit.
Value is the monetary evaluation of utilities created by business operations,
where utility means the capacity to satisfy demands of the peoples.
Business starts with investment of resources with the objective to earn
profit.
Investments are Non-Expendable funds.
Accounting is essential in business to calculate whether profit has
been earned and to show the status of the investments.

In modern complex business environment, to operate it efficiently , the

continuous supply of information is essential for decision making,
control, and evaluation.

Accounting is an Information System.

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 Accounting in Action
Accounting is the language of business as business express
itself to the users through financial statements and reports, prepared
by accountants.

Accounting supplies information through Financial Statements:

1. Balance Sheet 2. Income Statement
3. Statement of changes in Equity and 4. Cash-Flow Statement

And other Reports like : 1. Sales report 2. Purchase Statement

3. Inventory Position 4. Cash Statement.

Information is Supplied to 1. Internal Users

2. External Users

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Conceptual Framework