4  1.  OBJECTIVE Define accounting.

AccountingThe process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated to owners, managers, and other interested parties is the process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated to owners, managers, and other interested parties. An accounting systemA process designed to accumulate, classify, and summarize financial data is designed to accumulate data about a firm’s financial affairs, classify the data in a meaningful way, and summarize it in periodic reports called financial statementsPeriodic reports of a firm's financial position or operating results. Owners and managers obtain a lot of information from financial statements. The accountant

• establishes the records and procedures that make up the accounting system,
• supervises the operations of the system,
• interprets the resulting financial information.

Most owners and managers rely heavily on the accountant’s judgment and knowledge when making financial decisions.