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CHAPTER 4 The Procurement Process 49
3
CHAPTER
CHAPTER

Introduction to Accounting

LEARNING OBJECTIVES
After completing this chapter you will be able to:
1. Explain the differences between fi nancial accounting and man-
agement accounting.
2. Describe the organizational data related to fi nancial accounting.
3. Discuss and analyze the key types of master data involved with
fi nancial accounting.
4. Explain and apply basic accounting concepts.
5. Execute key processes in fi nancial accounting.

6. Identify key integration points between fi nancial accounting and
other processes.
7. Prepare reports in fi nancial accounting.

n Chapter 1 we briefl y introduced numerous processes that most organiza-
tions typically perform, such as fulfi llment, production, and procurement.
IA common feature of many—but not all—of these processes is that they
have consequences for the organization’s fi nancial position. The role of
accounting processes is to record the fi nancial consequences of the various
process steps. In turn, the organization uses this fi nancial information to plan
and manage these processes.
Accounting processes are broadly divided into two main categories:
fi nancial accounting and management accounting. Financial accounting (FI)
is concerned with recording the fi nancial impacts of business processes as they
are executed. Businesses use these data to generate fi nancial statements to
meet legal or regulatory reporting requirements. For example, in the United
States, the Securities and Exchange Commission (SEC) requires that all pub-
licly traded companies periodically submit fi nancial statements in a prescribed
format. Further, certain regulated industries, such as energy and health care,
have additional reporting requirements imposed by their respective regulat-
ing agencies. These reports are externally focused, meaning they are intended

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