Topic 1 - Introduction to Accounting
- What is accounting?
A simple definition of what is accounting? could easily be described as providing reliable and relevant financial information on a businesses performance.
- What are the four types of roles accountants can practise in?
The four main roles accountants can practise in are:
Government Accounting: Were a person is employed at a Government agency and usually practises in financial accounting or auditing of businesses.
Public Accounting: Is were a person provides a professional service to the public, usually in the manner of auditing, taxation, financial planning, consulting and reviews the businesses financial statements. The roles just mentioned are the most common roles a public accountant will complete in their day to day jobs however public accountants aren't just limited to these roles.
Commercial Accounting: Is were an accountant is usually employed in the financial and management sector of the business. In these roles the accountants make the day to day decisions and future planning based on information from financial data and collates them into reports for management to make the final decision.
Not For Profit Accounting: Is were accountants usually take part in the organisations decision making and planning. The not for profit sector is usually in business not to make a profit, but to gain funds for charities for this reason they are exempt from any taxes related to the purpose.
- What are the three main types of businesses that can be formed?
If someone decides to form a business they usually choose from one of the following structures:
- Sole Trader: Is a business owned and run by one person. It is easy and inexpensive to start up, as the owner of the business you make all the business decisions and receive all profits made.
- Partnership: Is a business owned and controlled by 2 or more individuals who share control of the business and share profits as outlined in a partnership agreement. This type of business structure is also easy to start up.
- Company: Is a business that is owned by its shareholders. The shareholders of the company elect a director at annual meetings who run the business on behalf of the shareholders.
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