Accounting For Dummies®, 4th Edition

1.2. Looking for Accounting in All the Right Places

Accounting extends into virtually every walk of life. You're doing accounting when you make entries in your checkbook and when you fill out your federal income tax return. When you sign a mortgage on your home, you should understand the accounting method the lender uses to calculate the interest amount charged on your loan each period. Individual investors need to understand accounting basics in order to figure their return on invested capital. And it goes without saying that every organization, profit-motivated or not, needs to know how it stands financially.

Here's a quick sweep to give you an idea of the range of accounting:

• Accounting for organizations and accounting for individuals

• Accounting for profit-motivated businesses and accounting for nonprofit organizations (such as hospitals, homeowners' associations, churches, credit unions, and colleges)

• Income tax accounting while you're living and estate tax accounting when you die

• Accounting for farmers who grow their products, accounting for miners who extract their products from the earth, accounting for producers who manufacture products, and accounting for retailers who sell products that others make

• Accounting for businesses and professional firms that sell services rather than products, such as the entertainment, transportation, and healthcare industries

• Past-historical-based accounting and future-forecast-oriented accounting (budgeting and financial planning)

• Accounting where ...