What is accounting?
Accounting refers to the practice of tracking a business’s income and expenses and using those figures to evaluate its financial status. One of the most basic accounting services is bookkeeping, which involves keeping a record of all financial transactions and then preparing financial statements such as balance sheets and income statements. Accountants can then take this information and roll it into tax services, another basic accounting service. But the business of accountants goes beyond just basic number-crunching. Accountants include a number of other services in their repertoire: auditing services, tax planning, business consulting, business valuation, and financial planning, just to name a few.
Accounting is the backbone of business. Ethical and professional accounting forms a clear financial image of a business, and allows managers to make informed decisions, keeps investors abreast of developments in the business, and keeps the business profitable. It is also one of the oldest professions; businesses have been practicing accounting for thousands of years. Cuneiform tablets from the fertile crescent, for example, show clear evidence of accounting practices. A number of disciplines are involved in accounting. At the root of all accounting is book keeping. A book keeper keeps tracks of all of the funds that a business handles, including money paid to the business, money paid out, and assets that the business holds. The book keeper’s goal is to keep the ledgers of the company balanced so that anyone can assess, at a glance, the financial state of the company. Records handled by a book keeper include payroll, company ledgers, bank statements, and paperwork pertaining to real est
Quite simply, accounting is a language: a language that provides information about the financial position of an organization. When you study accounting you are essentially learning this specialized language. By learning this language you can communicate and understand the financial operations of any and all types of organizations.
Ask a friend to respond to “accounting” and she’ll probably answer “bookkeeping.” Push a little harder and you’ll probably hear “debits and credits,” and maybe that accountants work with numbers, not people. This is only a half-truth. Accountants do work with numbers, but they deal mainly with people. From the numbers, they analyze financial information for others, and advise and consult with decision-makers. That is why our accounting majors not only have to master the fundamentals of accounting and auditing, but they must also take courses in areas such as history, English, psychology, foreign languages, economics, and fine arts. Because our students receive a solid education in liberal arts as well as in accounting, they enter their field well prepared to become leaders and effective communicators.
