Module 2: Introduction To Business and Accounting
Module 2: Introduction To Business and Accounting
Overview
Do you use accounting? Yes, we all use accounting information in one form
or another. For example, when you think about buying a phone, you use
accounting information to determine whether you can afford it. Similarly, when
you decided to enroll in college, you considered the costs (school fees, load
allowance, gadgets, and so on). Most likely, you also thought about the benefits
(the ability to obtain a good-paying job or starting your own business).
Learning Outcomes
Let Us Explore
There are three types of businesses that are operated for profit:
manufacturing, merchandising and service business. Each type of business has
unique characteristics.
Manufacturing businesses change basic inputs into products that are sold to
individual consumers. Examples of manufacturing businesses and some of their
products are shown below:
Owners. They have invested resources in the business and are therefore
interested in how the business performs. They want to get the most economic
value for their investment; thus, they want the business to be profitable.
Managers. They are the individuals who the owners have authorized to operate
the business. They are evaluated based on the economic performance of the
business.
Employees. They provide services to the business in exchange for payment. They
have an interest in the economic performance of the business because their jobs
depend upon it.
Creditors. They invest resources in the business by extending credit. They are
interested in the industry, mainly how well the company must generate enough
cash to pay them.
Ethics are the moral principles that guide the conduct of individuals. Regardless
of differences among individuals, proper ethical conduct implies behavior that
considers the impact of one's actions on society and others. In other words,
proper ethical conduct means that you not only think about what's in your best
interests but also what's in the best interest of others.
Ethical conduct is good for business. Business people should work within an
ethical framework. Although an ethical framework is based on individual
experiences and training, there are a number of sound principles that form the
foundation for ethical behavior.
1. Avoid small lapses. Minor ethical lapses may appear harmless in and of
themselves. Unfortunately, such lapses can compromise your works.
Minor ethical lapses can build up and lead to a more significant
consequence at a later point in time.
2. Focus on your long-term reputation. One characteristic of an ethical
dilemma is that it places you under severe short-term pressure. The moral
dilemma is created by the stated or unstated threat that the failure to "go
along" may result in undesirable consequences. You should respond to
ethical dilemmas by removing focus from the short-term pressures and
Let Us Wrap Up
Businesses are organizations that are operated primarily for profit. There
are three major types of business organizations, manufacturing, merchandising,
and the service business. As to legal form, we have the sole proprietorship,
partnership, and corporation. There are different stakeholders, namely the
owners, the managers, employees, customers, and the government. An
accounting information system is designed to provide stakeholders timely and
relevant information; thus, the following steps are undertaken to ensure that
purpose is served. Identification of stakeholders, determining the needs of the
stakeholders, designing the information system, recording economic
transactions and events, and preparing financial statements. Ethics plays a vital
part in business because it sets the framework that guides the conduct of people
in the organization.
Let Us Assess
Answer the following questions using your own words (and not from the
Google).
Write your answer on the Google Form uploaded in the assessment section
of the topic.
References
Fees, Philip E., Reeves, James M., Warren C.S, ACCOUNTING 19e, 2016,
United States of America, Southwestern College Publishing (pp. 1-9)