Integrated Business Processes with ERP Systems

CHAPTER 3

Introduction to Accounting

LEARNING OBJECTIVES

After completing this chapter you will be able to:

1. Explain the differences between financial accounting and management accounting.
2. Describe the organizational data related to financial accounting.
3. Discuss and analyze the key types of master data involved with financial accounting.
4. Explain and apply basic accounting concepts.
5. Execute key processes in financial accounting.
6. Identify key integration points between financial accounting and other processes.
7. Prepare reports in financial accounting.

In Chapter 1 we briefly introduced numerous processes that most organizations typically perform, such as fulfillment, production, and procurement. A common feature of many—but not all—of these processes is that they have consequences for the organization's financial position. The role of accounting processes is to record the financial consequences of the various process steps. In turn, the organization uses this financial information to plan and manage these processes.

Accounting processes are broadly divided into two main categories: financial accounting and management accounting. Financial accounting (FI) is concerned with recording the financial impacts of business processes as they are executed. Businesses use these data to generate financial statements to meet legal or regulatory reporting requirements. For example, in the United States, the Securities and Exchange Commission (SEC) requires that all publicly traded companies ...