Part I
Opening the Books on Accounting
In this part . . .
Accounting is indispensable in the worlds of business, investing, finance, and taxes. In this part, you find out why.
Accountants are the “information gatekeepers” in the economy. Without accounting, a business couldn’t function, wouldn’t know whether it’s making a profit, and would be ignorant of its financial situation. Accounting is equally vital in managing the business affairs of not-for-profit and governmental entities.
From its accounting records, a business prepares its financial statements, its tax returns, and the reports to its managers. Accounting methods used to prepare financial statements conform to established standards. If not, the financial reports of a business probably would be misleading and possibly fraudulent, which could have dire consequences.
Bookkeeping — the record-keeping part of accounting — must be done well to ensure that the financial information of a business is timely, complete, accurate, and reliable — especially the numbers reported in its financial statements and tax returns. Wrong numbers in financial reports and tax returns can cause all sorts of trouble.
