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52 CHAPTER 3 Introduction to Accounting

Figure 3-2: Business areas

for both business areas across all three companies. In contrast, in the lower
part of the fi gure, business areas are defi ned in terms of the geographic loca-
tions of the individual companies. Thus, fi nancial statements are generated for
all companies in North America and Europe.

Business Processes in Practice 3.1: Apple Inc.

Apple Inc. provides a familiar example of business results in both business areas and product segments
areas and segments in global public companies. Apple so that investors have a great deal of transparency
has four main business areas: the Americas, Europe, into the company’s operations. Were you to examine
Japan, and Retail. The Americas business area includes Apple’s annual report, you could locate total sales by
two segments, North America and South America. The business area (e.g., the Americas), by product segment
Europe business area includes the European countries within each business area (e.g., Mac desktops within
as well as the Middle East and Africa. Finally, the Retail the Americas), and by product segment globally (e.g.,
business area includes all Apple Stores across the globe, global Mac sales). This level of transparency is critical
which are managed as a separate business area. for investors and regulatory groups to properly analyze
Within each business area, Apple operates vari- and monitor Apple both as an individual company and
ous units for products, such as Mac computers, iPods, by comparison with its competitors in the industry.
iTunes, and iPads. Thus, Apple must report its fi nancial
Source: Apple company reports.

MASTER DATA

As previously stated, the goal of fi nancial accounting is to record the fi nancial
impact of business activities. These data are recorded in the company’s gen-
eral ledger. More specifi cally, the general ledger includes many accounts that
companies use to record fi nancial data. Each account tracks different types
of fi nancial data. For example, some accounts record sales revenues, whereas
others record the costs associated with producing and selling products. A list of
accounts that can be included in a general ledger is called a chart of accounts.
In this section we take a closer look at charts of accounts and general ledger
accounts.

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