I. Definition of Accounting Accounting is a service activity.

Its function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions, in making reasoned choices among alternative courses of action. Accounting is also defined as the process of identifying, measuring and communicatingeconomic information to permit informed judgment and decision by users of the information. Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of financial character and interpreting the results thereof. II. Purpose and Functions To provide quantitative, financial information about economic entities to statement usersso that they could make informed judgment and better decision.

Bookkeeping: Bookkeeping is the recording of financial transactions. Transactions include sales, purchases, income, receipts and payments by an individual or organization. Bookkeeping is usually performed by a bookkeeper. Many individuals mistakenly consider bookkeeping and accounting to be the same thing. This confusion is understandable because the accounting process includes the bookkeeping function, but [1] is just one part of the accounting process. The accountant creates reports from the recorded financial transactions recorded by the bookkeeper and files forms with government agencies. There are some common methods of bookkeeping such as the single-entry bookkeeping system and the double-entry bookkeeping system. But while these systems may be seen as "real" bookkeeping, any process that involves the recording of financial transactions is a bookkeeping process. A bookkeeper (or book-keeper), also known as an accounting clerk or accounting technician, is a person who records the day-to-day financial transactions of an organization. A bookkeeper is usually responsible for writing the "daybooks". The daybooks consist of purchases, sales, receipts, and payments. The bookkeeper is responsible for ensuring all transactions are recorded in the correct day book, suppliers ledger, customer ledger and general ledger. The bookkeeper brings the books to the trial balance stage. An accountant may prepare the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.

2. Internal users:

1. Owners : Business ownerswant to know whether their funds are being properly used or not. Accounting information helps them them to know the profitability and the financial position of the concern in which they have invested their funds.

2. Management: Accounting information is called the eyes and ears of management.It helps a manager in appraising the performance of the subordinates.

3. Employees : Employees of the organisation can get the actual information about the financial position of their organisation with the help of financial statements prepared by the accountant. External Users of accounting information :

1. Investors : Those who want to invest money in an organisation want to know the financial health of the organisation. They need accounting information which will help them in evaluating past performance and future prospects of the organisation.

2. Creditors : Creditors means supplier of goods and services on credit , banks and lenders of money who want to know the financial position of a concern before providing loans or granting credit.They need accounting information relating to current assets , quick assets and current liabilities which is available in the financial statements.

3. Members Of Non Profit Organisations : Non profit organisations such as hospitals , clubs , schools, colleges etc. need accounting information to know how their contributed funds are being utilised. This information helps them to make decision regarding future support.

4. Government : Government wants to know earnings or sales for a particular period for the purpose of taxation. Income tax returns are examples of financial reports which are prepared with information taken from accounting.

5. Research Scholars : Accounting information helps research scholars who wants to make a study into the financial operation of a particular firm.

3. four major fields

Public Accountants Careers in public accounting focus on auditing and tax functions. New public accountants usually work for several clients on their own or as part of a firm. Advancement to positions with more responsibility takes one or two years, and a few more for senior positions. Those who excel may become supervisors, managers, or partners; open their own public accounting firms; transfer to executive positions in management accounting; or become internal auditors in private firms. Larger firms prefer to hire master's degree graduates. Management Accountants Management accountants often start as cost accountants, junior internal auditors, or trainees for other accounting positions within a corporation. As they rise through the organization, they may advance to positions such as accounting manager, chief cost accountant, budget director, or manager of internal auditing. Some become controllers, treasurers, financial vice presidents, chief financial officers, or corporation presidents. Many senior corporation executives have a background in accounting, internal auditing, or finance. A bachelor's degree in accounting and two years' experience is required and professional licensing is recommended. The focus is on the reporting functions within the organization to contribute to planning and decision making. A management accountant also manages the reporting to stock holders, regulatory agencies, and tax authorities. Government Accountants Government accountants can work at any level of government to analyze and oversee the performance and allocation of funds. At the federal level, opportunities exist in such diverse areas as the Department of Defense, the IRS, and the Securities and Exchange Commission. Internal Auditors Internal auditors deal with conducting compliance audits, developing internal controls, and establishing accounting information systems. As they advance in their careers, they can become involved in operational audits and provide recommendations and plans for continued financial improvement within an organization. 4. three forms of business organization:

Sole Proprietorship A sole proprietorship is a business owned by one person. This is the simplest type of business to start and is the least regulated form of organization. For this reason, there are more proprietorships than any other type of business, and many businesses that later become large corporations start out as small proprietorships. The owner of a sole proprietorship keeps all the profits. That's the good news. The bad news is that the owner has unlimited liability for business debts. This means that creditors can look to the proprietor's personal assets for payment. Similarly, there is no distinction between personal and business income, so all business income is taxed as personal income. The life of a sole proprietorship is limited to the owner's life span, and, importantly, the amount of equity that can be raised is limited to the proprietor's personal wealth. This limitation often means that the

business is unable to exploit new opportunities because of insufficient capital. Ownership of a sole proprietorship may be difficult to transfer since this requires the sale of the entire business to a new owner. Partnership A partnership is similar to a proprietorship, except that there are two or more owners (partners). In a general partnership, all the partners share in gains or losses, and all have unlimited liability for all partnership debts, not just some particular share. The way partnership gains (and losses) are divided is described in the partnership agreement. This agreement can be an informal oral agreement, such as let's start a lawn mowing business, or a lengthy, formal written document. In a limited partnership, one or more general partners will run the business and have unlimited liability, but there will be one or more limited partners who do not actively participate in the business. A limited partner's liability for business debts is limited to the amount that partner contributes to the partnership. This form of organization is common in real estate ventures, for example. The advantages and disadvantages of a partnership are basically the same as those for a proprietorship. Partnerships based on a relatively informal agreement are easy and inexpensive to form. General partners have unlimited liability for partnership debts, and the partnership terminates when a general partner wishes to sell out or dies. All income is taxed as personal income to the partners, and the amount of equity that can be raised is limited to the partners' combined wealth. Ownership by a general partner is not easily transferred because a new partnership must be formed. A limited partner's interest can be sold without dissolving the partnership, but finding a buyer may be difficult. Because a partner in a general partnership can be held responsible for all partnership debts, having a written agreement is very important. Failure to spell out the rights and duties of the partners frequently leads to misunderstandings later on. Also, if you are a limited partner, you must not become deeply involved in business decisions unless you are willing to assume the obligations of a general partner. The reason is that if things go badly, you may be deemed to be a general partner even though you say you are a limited partner. Based on our discussion, the primary disadvantages of sole proprietorships and partnerships as forms of business organization are (1) unlimited liability for business debts on the part of the owners, (2) limited life of the business, and (3) difficulty of transferring ownership. These three disadvantages add up to a single, central problem: The ability of such businesses to grow can be seriously limited by an inability to raise cash for investment. Corporation The corporation is the most important form (in terms of size) of business organization in the United States. A corporation is a legal person separate and distinct from its owners, and it has many of the rights, duties, and privileges of an actual person. Corporations can borrow money and own property, can sue and be sued, and can enter into contracts. A corporation can even be a general partner or a limited partner in a partnership, and a corporation can own stock in another corporation. Not surprisingly, starting a corporation is somewhat more complicated than starting the other forms of business organization. Forming a corporation involves preparing articles of incorporation (or a charter) and a set of bylaws. The articles of incorporation must contain a number of things, including the corporation's name, its intended life (which can be forever), its business purpose, and the number of shares that can be issued. This information must normally be supplied to the state in which the firm will be incorporated. For most legal purposes, the corporation is a resident of that state.

The bylaws are rules describing how the corporation regulates its own existence. For example, the bylaws describe how directors are elected. The bylaws may be amended or extended from time to time by the stockholders. In a large corporation, the stockholders and the managers are usually separate groups. The stockholders elect the board of directors, who then select the managers. Management is charged with running the corporation's affairs in the stockholders' interests. In principle, stockholders control the corporation because they elect the directors. As a result of the separation of ownership and management, the corporate form has several advantages. Ownership (represented by shares of stock) can be readily transferred, and the life of the corporation is therefore not limited. The corporation borrows money in its own name. As a result, the stockholders in a corporation have limited liability for corporate debts. The most they can lose is what they have invested. The relative ease of transferring ownership, the limited liability for business debts, and the unlimited life of the business are the reasons why the corporate form is superior when it comes to raising cash. If a corporation needs new equity, it can sell new shares of stock and attract new investors. The number of owners can be huge; larger corporations have many thousands or even millions of stockholders. For example, the General Electric Company (better known as GE) has about 10 billion shares outstanding and 4 million shareholders. The corporate form has a significant disadvantage. Since a corporation is a legal person, it must pay taxes. Moreover, money paid out to stockholders in the form of dividends is taxed again as income to those stockholders. This is double taxation, meaning that corporate profits are taxed twice: at the corporate level when they are earned and again at the personal level when they are paid out. Today all 50 states have enacted laws allowing for the creation of a relatively new form of business organization, the limited liability company (LLC). The goal of this entity is to operate and be taxed like a partnership but retain limited liability for owners, so an LLC is essentially a hybrid of partnership and corporation. Although states have differing definitions for LLCs, the more important scorekeeper is the Internal Revenue Service (IRS). The IRS will consider an LLC a corporation, thereby subjecting it to double taxation, unless it meets certain specific criteria. In essence, an LLC cannot be too corporationlike, or it will be treated as one by the IRS. LLCs have become common. For example, Goldman, Sachs and Co., one of Wall Street's last remaining partnerships, decided to convert from a private partnership to an LLC (it later went public, becoming a publicly held corporation). Large accounting firms and law firms by the score have converted to LLCs.

5. What Can You Do With a College Major in Accounting? The accounting field has a high degree of mobility potential and your advancement depends on your continued education and certification. Accountants can specialize in different businesses or fields, or according to particular accounting functions.

Frederick Winslow Taylor Frederick Winslow Taylor (March 20, 1856 March 21, 1915) was an American mechanical engineer who sought to improve industrial efficiency. He is regarded as the father of scientific management and was one of the first management consultants. Taylor was one of the intellectual leaders of the Efficiency Movement and his ideas, broadly conceived, were highly influential in the Progressive Era. Work: Taylor was a mechanical engineer who sought to improve industrial efficiency. Taylor is regarded as the father of scientific management, and was one of the first management consultants and director of a famous firm. In Peter Drucker's description, Frederick W. Taylor was the first man in recorded history who deemed work deserving of systematic observation and study. On Taylor's 'scientific management' rests, above all, the tremendous surge of affluence in the last seventy-five years which has lifted the working masses in the developed countries well above any level recorded before, even for the well-to-do. Taylor, though the Isaac Newton (or perhaps the Archimedes) of the science of work, laid only first foundations, however. Not much has been added to them since even though he has been dead all of sixty years. Future US Supreme Court justice Louis Brandeis coined the term scientific management in the course of his argument for the Eastern Rate Case before the Interstate Commerce Commission in 1910. Brandeis debated that railroads, when governed according to the principles of Taylor, did not need to raise rates to increase wages. Taylor used Brandeis's term in the title of his monograph The Principles of Scientific Management, published in 1911. The Eastern Rate Case propelled Taylor's ideas to the forefront of the

management agenda. Taylor wrote to Brandeis "I have rarely seen a new movement started with such great momentum as you have given this one." Taylor's approach is also often referred to asTaylor's Principles, or frequently disparagingly, as Taylorism. Taylor's scientific management consisted of four principles: 1. Replace rule-of-thumb work methods with methods based on a scientific study of the tasks. 2. Scientifically select, train, and develop each employee rather than passively leaving them to train themselves. 3. Provide "Detailed instruction and supervision of each worker in the performance of that worker's discrete task" (Montgomery 1997: 250). 4. Divide work nearly equally between managers and workers, so that the managers apply scientific management principles to planning the work and the workers actually perform the tasks.

Henri Fayol Henri Fayol (Istanbul, 29 July 1841Paris, 19 November 1925) was a French mining engineer and director of mines who developed a general theory of business administration. He and his colleagues developed this theory independently of scientific management but roughly contemporaneously. He was one of the most influential contributors to modern concepts of management. Work: Fayolism Fayol's work was one of the first comprehensive statements of a general theory of management. He proposed that there were five primary functions of management and 14 principles of management Functions of management 1. 2. 3. 4. 5. to forecast and plan to organize to command to coordinate to control (French: contrler: in the sense that a manager must receive feedback about a process in order to make necessary adjustments).

Principles of Management 1. Division of work. This principle is the same as Adam Smith's 'division of labour'. Specialisation increases output by making employees more efficient. 2. Authority. Managers must be able to give orders. Authority gives them this right. Note that responsibility arises wherever authority is exercised. 3. Discipline. Employees must obey and respect the rules that govern the organization. Good discipline is the result of effective leadership, a clear understanding between management and workers regarding the organization's rules, and the judicious use of penalties for infractions of the rules. 4. Unity of command. Every employee should receive orders from only one superior. like from top to bottom in an organization.

5. Unity of direction. Each group of organisational activities that have the same objective should be directed by one manager using one plan. 6. Subordination of individual interests to the general interest. The interests of any one employee or group of employees should not take precedence over the interests of the organization as a whole. 7. Remuneration. Workers must be paid a fair wage for their services. 8. Centralisation. Centralisation refers to the degree to which subordinates are involved in decision making. Whether decision making is centralized (to management) or decentralized (to subordinates) is a question of proper proportion. The task is to find the optimum degree of centralisation for each situation. 9. Scalar chain. The line of authority from top management to the lowest ranks represents the scalar chain. Communications should follow this chain. However, if following the chain creates delays, cross-communications can be allowed if agreed to by all parties and superiors are kept informed. 10. Order. People and materials should be in the right place at the right time. 11. Equity. Managers should be kind and fair to their subordinates. 12. Stability of tenure of personnel. High employee turnover is inefficient. Management should provide orderly personnel planning and ensure that replacements are available to fill vacancies. 13. Initiative. Employees who are allowed to originate and carry out plans will exert high levels of effort. 14. Esprit de corps. Promoting team spirit will build harmony and unity within the organization. Fayol's work has stood the test of time and has been shown to be relevant and appropriate to contemporary management. Many of todays management texts including Daft have reduced the six functions to four: (1) planning; (2) organizing; (3) leading; and (4) controlling. Daft's text is organized around Fayol's four functions....

Frank and Lillian Gilbreth Work: Time and Motion Study A time and motion study (or time-motion study) is a business efficiency technique combining the Time Study work of Frederick Winslow Taylor with the Motion Study work of Frank and Lillian Gilbreth (not to be confused with their son, best known through the biographical 1950 film and book Cheaper by the Dozen). It is a major part of scientific management (Taylorism). After its first introduction, time study developed in the direction of establishing standard times, while motion study evolved into a technique for improving work methods. The two techniques became integrated and refined into a widely accepted method applicable to the improvement and upgrading of work systems. This integrated approach to work system improvement is known as methods engineering and it is applied today to industrial as well as service organizations, including banks, schools and hospitals. Time and motion study have to be used together in order to achieve rational and reasonable results. It is particularly important that effort to be applied in motion study to ensure equitable results when time study

is used. In fact, much of the difficulty with time study is a result of applying it without a thorough study of the motion pattern of the job. Motion study can be considered the foundation for time study. The time study measures the time required to perform a given task in accordance with a specified method and is valid only so long as the method is continued. Once a new work method is developed, the time study must be changed to agree with the new method.

Max Weber Work: Max Weber (1864-1920), who was a German sociologist, proposed different characteristics found in effective bureaucracies that would effectively conduct decision-making, control resources, protect workers and accomplish organizational goals. Max Weber's model of Bureaucracy is oftentimes described through a simple set of characteristics, which will be described in this article. Max Weber's work was translated into English in the mid-forties of the twentieth century, and was oftentimes interpreted as a caricature of modern bureaucracies with all of their shortcomings. However, Weber's work was indented to supplant old organizational structures that existed in the earlier periods of industrialization. To fully appreciate and understand the work of Max Weber, one therefore has to keep the historic context in mind, and not "just" see his work as a caricature of bureaucratic models. Below, some characteristics of the bureaucratic model are presented. Each characteristic is described in relation to which traditional features of administrative systems they were intended to succeed. Fixed division of labor The jurisdictional areas are clearly specified, and each area has a specific set of official duties and rights that cannot be changed at the whim of the leader. This division of labor should minimize arbitrary assignments of duties found in more traditional structures, in which the division of labor was not firm and regular, and in which the leader could change duties at any time. Hierarchy of offices Each office should be controlled and supervised by a higher ranking office. However, lower offices should maintain a right to appeal decisions made higher in the hierarchy. This should replace a more traditional system, in which power and authority relations are more diffuse, and not based on a clear hierarchical order. Rational-legal authority A bureaucracy is founded on rational-legal authority. This type of authority rests on the belief in the "legality" of formal rules and hierarchies, and in the right of those elevated in the hierarchy to posses authority and issue commands. Authority is given to officials based on their skills, position and authority placed formally in each position. This should supplant earlier types administrative systems, where authority was legitimized based on other, and more individual, aspects of authority like wealth, position, ownership, heritage etc. Learn more about Max Weber's types of authority here Creation of rules to govern performance Rules should be specified to govern official decisions and actions. These formal rules should be relatively stable, exhaustive and easily understood. This should supplant old systems, in which rules were either ill-defined or stated vaguely, and in which leaders could change the rules for conducting the daily work arbitrarily. Separation of personal from official property and rights Official property rights concerning e.g. machines or tools should belong to the office or department -

not the officeholder. Personal property should be separated from official property. This should supplant earlier systems, in which personal and official property rights were not separated to the needed extent. Selection based on qualifications Officials are recruited based on qualifications, and are appointed, not elected, to the office. People are compensated with a salary, and are not compensated with benefices such as rights to land, power etc. This should supplant more particularistic ways of staffing found in more traditional systems, where officials were often selected due to their relation with the leader or social rank. Benefices such as land, rights etc. were also common ways of compensating people, which was to be replaced by a general salary matching qualifications. Clear career paths Employment in the organizations should be seen as a career for officials. An official is a full-time employee, and anticipates a lifelong career. After an introduction period, the employee is given tenure, which protects the employee from arbitrary dismissal. This should supplant more traditional systems, in which employees' career paths were determined by the leader, and in which employees lacked the security of tenure.

Max Weber viewed these bureaucratic elements as solutions to problems or defects within earlier and more traditional administrative systems. Likewise, he viewed these elements as parts of a total system, which, combined and instituted effectively, would increase the effectiveness and efficiency of the administrative structure. The bureaucratic structure would to a greater extent protect employees from arbitrary rulings from leaders, and would potentially give a greater sense of security to the employees. Additionally, the bureaucratic structure would create an oppurtunity for employees to become specialists within one specific area, which would increase the effectiveness and efficiency in each area of the organization. Finally, when rules for performance are relatively stable, employees would have a greater possibility to act creatively within the realm of their respective duties and sub-tasks, and to find creative ways to accomplish rather stable goals and targets.