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Introductions and Definitions

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As part of our week one assignment, we were asked to review a video pertaining to accounting introductions and definitions. Ms. Samantha Boncheck who spoke to the fascinating world of accounting even though many non-accountants would struggle with such a perspective. She defined the term “Accounting” as the means of collecting financial data about a company, recording that data, analyzing it, and then communicating what it means to other people (Films Media Group, 2009Year).
Samantha explained that any attempt to run a business without accounting would be complete chaos. Speaking from a personal experience working on a budget, I could not imagine making decisions without the accounting information generated from executed the budget. Accounting data helps drive every decision from prioritizing current shortfalls to long term forecasting. The video provided an example from the perspective of a loan bank officer. To assess the risk, a loan officer relies on financial information to make an determination. Investors need financial information to decide which stocks to buy or sell. The Internal Revenue Service, rely on a company’s financial information to evaluate how much taxes the company should pay.
The video also expressed that accounting must be organizations and structured because it affects everyone associated with business. We cannot have companies defining profits and losses differently. The video went on to discuss the three types of business organizations, which are: * Sole proprietorship – A business owned by an individual. Sole proprietorships are the most common, making up about 71% of the number of business in the United States. However, they generate about 65 of the business revenue in the United States.

* Partnerships – A business owned by two or more people. About 20% of businesses are partnerships.

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