What Is Accounting?

Accounting is the language of business. It is a standard set of rules for measuring a firm’s financial performance. Assessing a company’s financial performance is important for many groups, including:

• The firm’s officers (managers and employees)

• Investors (current and potential shareholders)

• Lenders (banks)

• General public

Standard financial statements serve as a yardstick of communicating financial performance to the general public.

For example, monthly sales volumes released by McDonald’s Corp. provide both its managers and the general public with an opportunity to assess the company’s financial performance across major geographic segments.