SESSION ACCOUNTING DEFINITION What is accounting? It depends. It depends on who you are asking.

. For the accountant, it is one are of business activit that they use to derive an incomode. A more professional way of putting that could be, that accounting is an occupation that is engaged in the service of providing reliable and relevant financial information that can be used by others to make informed decisions. One official definition of accounting is provided by the American Accounting Association which defines accounting as follows: The process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information. For the rest of us, the definition and purpose of accounting could be any one or a combination of the following: 1.- PROFESSORS OF ACCOUNTING may call it The lenguage of business 2.-ECONOMISTS may define it as practical application of economic theory in that it measures income and values assets. 3.-CORPORATE MANAGR may define it as set of timely gauges that helps them actually manage the organisation 4.-LABOR UNIONS may see it as a monitor of an organisations activities and performance, particulary in relation to the benefits secured by employees Vs owners. 5.- A BOARD OF DIRECTORS OR A CHIEF EXECUTIVE OFFICER (CEO) may see accounting as a data process and reporting sustem that provided the information needed for sound financial or economic decision making or their organisation. 6.-BANKS and other providers of loan funds may see it as a process of providing reports showing the financial position of an organisation in relation to the assets owned, amounts owed to others and monies invested as well as the profitability of the organisation's operation in relation to repaying the loan with interest. 7.-GOVERNMENTS may see it as a way of making organisations accountable to the general community by way taxation contributions and transparency in the outcomes from their decision making 8.-POTENTIAL INVESTORS may see it a a method of evaluating an organisation's effectiveness in relation to industry benchmarks and the investor's requiered returns. 9.-INVESTORS in some failed enterprises may sadly call it a method of fooling some of the people, some of the time with what has been dubbed CREATIVE ACCOUNTING One final point to make here, is that accounting is not an end in itself. It is not art to be hung in a museum as a beautiful set of numbers. Accounting is a means to an end i.e. Ir provides the most relevant and reliable information possible to allow for the real work to be done the making of the best possible decisions.
We can see from these definitiones that accounting can be divided into two man elements: an information process that identifies, classifies and summarisesthe financial events that take place within an organisation and a reporting system that communicates relevant financial information to interested persons which allows them to assess performance, make decisions and/or control the economic resources in the organisation. Activiry 1 *research the interbet to find the website of an "accounting association" based in your country. * search the side to find their definition of accounting abd write it down. *use underlying or coloring to identify the two main parts identified in the summare definition above. PART 2- how does the accounting function benefit the entrepreneur? Sucess in any business needs a potent combination of both innovative problem solving (value creation) and business acumen (value mantenance and control). Accounting won't help much with the former but it is the central pillar on which bussines acumen is built. Entrepreneurs by apply. Nature rely heavily on their innovative insights but the duccessful ones also know how and when to apply business acumen in their decisions via the reality checks and the more objetive results provided by the accounting funtion. Listed below are a few ways in which the accounting function impacts on and/or benefits the entrepreneur: 1) the most obvious one is the help in preparing our financial records for tax assessment purposes. This is usually annually for income tax but laws in some countries require more frequent reporting due to value added taxes and employee withheld taxes.

Depending on your business structure and industry, you may also be required to provide your financial information to government agencies or even some trade associations under menbership rules. 2) another common use of the accounting function for entrepreneurs is in the preparation of financial forecasts, this may be in the preparation of a business plan/proposal or when applying to a funder for a loan or selling a share of the business to an investor/ partner. You must still tell the written and oral story of the business but by providing your assumptions to an accountant, they can traslate that story into a language that is understood by all in common.Hence, accounting has come to be known as the "language of business" 3) it helps you calculate the break even for your planned venture. This is a critical number for an entrepreneur to both know and be able to readonably defend to any interested stakeholder. 4) the accounting function helps keep you 'in the game'.Entrepreneurs by nature live in the future because that's where they believe their reward wil materialize, trouble is, the vast majority of people want to be paid in the present.the accounting function with its cash flow modelling and profit reporting can ssist the entrepreneur in ensuring that they actually make in to their future reward

5.- It's a reality check. Emtrepreneurs kne that things change. They know that the real opportunity that emerges if often times not the primary one that they set out exploit. The accountin function helps you to quickly pick the emerging winners and identify the losers. Sure, entrepreneurs are very persistent people in any race but the smart ones know when to 'stop flogging a dead horse' and climb aboard a winner when the objective assessment shows that it is required. 6.- Once a new venture is trading, the accounting funtion can helps monitor important key indicators like gross profit margin which is the difference between your selling price and cost of producing/buying the product. Your accountant can set you up with many other key indicators which will become the instrument panel by which you guide and direct your enterprise. SUMARY ACCOUNTING BEEFIT FOR ENTREPRENEUR We have seen that accounting is an important function that helps entrepreneurs in oth establishing and managing their enterprises. It helps with tax assessment, preparing financial forecasts, calculating your breakeven, it keeps you in the game, it's reality check and can be used to create an instrument panel to efficiently manage your new enterprise all the way to success. ACTIVITY 2 *RESEARCH THE INTERNET TO FIND THE WEBSITE OF AN ACCOUNTANT IN YOUR AREA *SEARCH THEIR SITE TO FIND THE LIST OF SERVICES PROVIDE *IDENTIFY THREE THAT MATCH THE SIX OUNTLINED OBOVE AND/OR IDENTIFY ONE SERVICE FROM THEIR SITE THAT IS NOT MENTIONES ABOVE PART 3 WHAT IS THE DIFFERENCE BETWEEN A BOOKKEEPER AND AN ACCOUNTANT? We hear the tow terms of bookkeeperand accountant used so often and interchangeably when dealing with the finances aspects of a business. The reality is that they are tow quite distinct roles requiring tow quite distintic skill sets. As mentioned in the summary of PART 1, the broad concept of accounting consists of tow main elements. 1.- the information process that identifies, classifies and summarises the financial events that take place within an organisation 2.- the reporting system that communicates relevant financial information to interested persons which allows them to assess performance, make decesions and/or control the economic resources in the organisation. Now, as a rule, bookkeepers only do the first element whilst accountant, who could do both, gnererally stick with the second, This is because accountants are uniquely specialised professionals (read expensive) whose time would be poorly invested in tasks that a computer + accounting software + a competent clerk could easily perform.

BOOKKEEPING is generally considered the tedious, clerical and exacting role in the accounting function which is why it has been large taken over by computer processors with their inbuilt software systems.Bookkepingis all about the routine and systematic recording of the organisation's financial transactions, both incoming and outgoing, on a day-yoday basis. The bookkeeper function today is performed primarily by skilled clerical personnel who may or may not have had any formal accounting training because the role calls for a more follow-theinstructions approach than a creative one. Bookkeeping in large part is a task oriented function i.e. It records transactions