areers in Accounting
A Career in Information Systems
Have you ever heard the sayings “knowledge is power” or “information is money”? When people talk about accounting, what they are really talking about is information. The information used by businesses, as well as the technology that supports that information, represents some of the most valuable assets for organizations around the world. Very often, the success of a business depends on effective creation, management, and use of information. As companies become ever more reliant on technology, the need for welleducated Management Information Systems (MIS) auditors and control professionals increases. Improved technology has the potential to dramatically improve business organizations and practices, reduce costs and exploit new business and investment opportunities. At the same time, companies face constant challenges in selecting and implementing these new technologies. Because of their high value and inherent complexity, the development, support, and auditing of information systems has become one of the fastest growing specialties in accounting. Graduates with special interests and skills in computing and technology have expansive opportunities. In addition to traditional accounting and auditing functions, MIS professionals perform evaluations of technologies and communications protocols involving electronic data interchange, client servers, local and wide area networks, data communications, telecommunications, and integrated voice/data/video systems. In public accounting, technology has impacted the auditing profession by extending the knowledge required to draw conclusions and the skills required to audit advanced accounting and information systems. With management consulting practices growing and information systems becoming a larger percentage of public accounting revenue, MIS professionals are in high demand. If you are considering a degree in computer or information systems, you should consider the advantages that an accounting major or minor can give you in working closely with businesses and consulting firms. A dual major in accounting and MIS is one of the most desirable undergraduate degree combinations in the workforce.
Completing the Accounting Cycle
This chapter explains two new steps in the accounting cycle—the preparation of the work sheet and closing entries. In addition, we briefly discuss the evolution of accounting systems and present a classified balance sheet. This balance sheet format more closely resembles actual company balance sheets. After completing this chapter, you will understand how accounting begins with source documents that are evidence of a business entity’s transactions and ends with financial statements that show the solvency and profitability of the entity.
After studying this chapter, you should be able to: 1. Summarize the steps in the accounting cycle. 2. Prepare a work sheet for a service company. 3. Prepare an income statement, statement of retained earnings, and balance sheet using information contained in the work sheet. 4. Prepare adjusting and closing entries using information contained in the work sheet. 5. Prepare a post-closing trial balance. 6. Describe the evolution of accounting systems.
The Accounting Cycle Summarized
In Chapter 1, you learned that when an event is a measureable business transaction, you need adequate proof of this transaction. Then, you analyze the transaction’s effects on the accounting equation, Assets = Liabilities + Stockholders’ equity. In Chapters 2 and 3, you performed other steps in the accounting cycle. Chapter 2 presented the eight steps in the accounting cycle as a preview of the content of Chapters 2 through 4. As a review, study the diagram of the eight steps in the accounting cycle in Illustration 4.1 (page 135). Remember that the first three steps occur during the accounting period and the last five occur at the end. The...