This is the second video in the Accounting 101 series! Throughout the series, we're going to be covering everything you need to know in your average college accounting class. It will be informative, and hopefully even a little bit entertaining. I hope you can join us for the ride! In this video, we go over the main ethics acronyms you need to know in accounting. Visit www.thejrexecutive.com for articles and videos on business, economics, and finance! The Jr Executive is a platform for young, future executives to get involved in business and economics while earning scholarships! Doctors have rules and guidelines to follow when attending to a patient. Architects have protocols in place to make sure their buildings are structurally sound. Accountants are no different. Ethics are extremely important in the financial world. If companies could create, edit, and change their earnings without any oversight nobody would invest in the stock market! For accounting, there are a few key terms and acronyms you need to know in regards to ethics. Number one is the Sarbanes-Oxley Act, lovingly termed SOX. Sox was passed by congress to try and lower corporate scandals and unethical behavior. SOX did a few things: It required the upper management of companies to certify the accuracy of financial information, it increased penalties for fraudulent financial activity, and it also made outside auditors who check the accuracy of financial statements be more independent. Aside from Congress, the accounting profession developed its own standards to follow. The standards are termed GAAP, or Generally Accepted Accounting Principles. In the united states, the Financial Accounting Standards Board (FASB) is the one who set the standards of GAAP. Outside of the US, the International Accounting Standards Board (IASB) sets its own standards called International Financial Reporting Standards, or IFRS. Because we live in a global economy, both GAAP and IFRS have been moving closer and closer together so that the US company’s statements can be more easily compared to those outside of America. This process is called ‘convergence’. Someday, we hope that the standards of GAAP and IFRS merge completely!

This is the first video in the Accounting 101 series! Throughout the series we're going to be covering everything you need to know in your average college accounting class. It will be informative, and hopefully even a little bit entertaining. I hope you can join us for the ride! In this video we tackle the most basic question: What actually is Accounting? Visit www.thejrexecutive.com for articles and videos on business, economics, and finance! The Jr Executive is a platform for young, future executives to get involved in business and economics while earning scholarships! We are looking for writers! Please visit www.thejrexecutive.com for more info. So what is Accounting? Here's the textbook definition of accounting: Accounting consists of 3 basic activities - it identifies, records, and communicates the economic events of an organization to interested users. So, first off, what are economic events? That’s any event that impacts the finances of the company it could mean a soda company selling a soda, or a company or person providing a service to someone - anything that impacts the financials. First accountants identify any and all economic events that have occurred in the company. Next, accountants record those events in financial statements (we’re gonna be going through those financial statements later). Finally, accountants communicate those financial statements to the “interested users.” Now, interested users would really be anyone who is interested in the financials of the company, but traditionally they’re broken down into two different categories. There are the ‘internal users’, which consists of anyone within the company itself. Internal users could be the finance for the marketing department. The HR department or the CEO. Managerial accountants usually focus on internal users. The other side are the ‘external users’. Those are users who are not actually in the company itself. They could be investors or creditors, it could be government agencies like the IRS or the SEC. Financial accountants are the ones who typically deal with external users. Summing it all up: Accounting is the process of gathering all of the financials of a company into financial statements for anyone who would need to see it. Anyway, throughout these videos we are going to be covering everything you need to know in your average college accounting class. It will be informative, and hopefully a little bit entertaining. I hope you can join us for the ride!