Accounting, Its Sub-fields, Careers and Professional Bodies

What Is Accounting?

Accounting is the process of identifying, recording, classifying, summarising and reporting the financial transactions of an entity so that the information can be used to make decisions. It is wider than bookkeeping, which is only the recording of transactions; accounting also includes interpreting and reporting that information.

Sub-fields of Accounting

• Financial accounting — prepares financial statements for external users such as investors, creditors and the tax authority (LHDN).
• Cost accounting — calculates and controls the cost of producing goods or services.
• Management accounting — supplies information to internal management for planning and decision-making.
• Auditing — an independent examination of financial statements to verify their accuracy.

Careers and Professional Bodies

Careers in the field include accountant, auditor, cost accountant and tax adviser. In Malaysia, a person cannot lawfully call themselves an "accountant" without registering with the Malaysian Institute of Accountants (MIA), the body that regulates the profession under the Accountants Act 1967.

Why Accounting Matters

Accounting information is important to many parties. Owners use it to judge profit or loss and to plan; creditors and banks assess whether a business can repay before granting credit; investors weigh whether investing is worthwhile; employees want to know their employer is stable; and LHDN uses it to compute tax. Without tidy records an owner cannot know whether the business is making a profit or a loss and cannot make sound decisions. This is why accounting is often called the "language of business".