Introduction to accounting

Since people have owned properly they have devised methods of keeping a record of what they possessed and its value. They wished to keep an account of what they had and, when responsible for other people’s property, they needed to render an account of how they had used it. Traditionally the accounting profession has been divided into financial accountants, whose professional association is the Institute of Chartered Accountants, and management accountants, who are members of the Institute of Cost and Management Accountants.

Financial accountants are primarily concerned with making sure that the accounts of a business are a true and fair record of the financial transactions of the business. They may do this by drawing up the accounts of a business from the records kept by the various departments or, acting on behalf of another business, they may examine existing accounts and declare them to be a true and fair record. This process is known as auditing.

Management accountants are more interested in the information they can derive from financial accounts.

2.Comprehension check.

Working in pairs, answer the questions.

a) What is of vital importance for people if they own property and run a business?

b) What is a traditional division in the accounting profession?

c) Which of two professional associations mentioned in the text relates to financial accountants and which to management accountants?

d) In what way do the responsibilities of a financial accountant differ from a management accountant?