- Okay, let's review the four flavors of accounting.
- [Man] First, there's bookkeeping.
Bookkeeping has been around for 7,000 years.
Bookkeeping is simply keeping track of our stuff
and gathering information about the transactions
that occur in a business or an organization.
- [Man] It turns out if you don't have bookkeeping,
then no higher level accounting is even possible.
- So bookkeeping is gathering the transaction data
so we have a chance of knowing what is happening
in our organization.
- [Man] The second flavor of accounting
is financial accounting.
Financial accounting involves summary reports.
Three pages.
The balance sheet.
The income statement and the statement of cash flows.
- These summary reports are given
to people outside our business
who are making decisions with respect to our business.
- Maybe a bank is considering whether to loan us money.
- Maybe some potential investors are considering
whether to invest in our company.
- Perhaps a potential supplier is considering
whether to sell to us some credit.
- Maybe a news reporter out there just wants to get
a general sense of what's going on in our business.
- [Man] These people would look at
the summary financial accounting reports.
Really.
Just think of these reports as three pages that summarize
our financial performance and our financial position.
- [Man] The third flavor of accounting
is managerial accounting.
- [Man] Managerial accounting is detailed.
It's secret.
We don't let people outside our company
see our managerial accounting data.
We use these data on a daily basis
to make detailed decisions.
- Any manager in any kind of organization
is looking at managerial accounting reports all the time.
- Any piece of paper that comes across
your desk that has a number on it,
it's probably related to a managerial accounting report.
- Managerial accounting data are what people use
on a daily basis to make decisions in their organization.
- [Man] Now, the fourth flavor of accounting.
Income tax accounting.
The focus in income tax accounting is making sure
that you're in compliance with the law.
- [Man] Income tax accounting can be quite complex.
The regulations and the internal revenue code of
the United States go on for many, many, thousands of pages.
- But there are some simple concepts that are applicable
to all income tax systems around the world.
And we discuss those in this course.
- Now you might be saying to yourself,
I love this accounting staff.
I want to know more about accounting.
I've heard a little bit here,
but I want to know more.
- Fortunately, we've prepared
many additional accounting related courses
that are available here in LinkedIn Learning.
Enjoy.
- Good luck.
Remember, the four flavors of accounting.
You are now a powerful person.
Armed with the knowledge of accounting.
Best wishes to you.