What is an accountant

An accountant goes over the book­keeping records of a business to find out how much the business is actually worth, and how much money it is mak­ing, and (very often) how it could make more money. His profession is called accountancy, or, more often, accounting. The first step in accounting is bookkeep­ing (and there is a separate article on bookkeeping in a later volume), but accounting only begins there. The book­keeper sets down the figures that show how much money a business has taken in and how much it has spent, but the accountant tells what the figures mean. Very few people realize how big a part the accountant has played in the growth of the United States. Until about 100 years ago, accounting was not a very important or very well developed profession. This means it is a very young profession, considering that there have been doctors for thousands of years and lawyers for almost as long. Then, as businesses grew bigger and bigger, and government laws grew more and more complex, the need for ac­counting grew.

The general public would not invest in a big business unless it had a system for proving that their money was being spent wisely. Ac­ All manufacturing, banking and business depends on good accounting. countants provided this system. A big business with dozens of branches and thousands of employees would be in a constant mess if it were not for account­ing systems to show exactly how its money was being spent and with what success, and accountants worked out the system for that too. Alfred P. Sloan, for many years head of General Motors Cor­poration, one of the biggest businesses in the world, once said that good ac­counting is the backbone of successful business. Accounting is a profession, which means that the person who practices it must have special education. An ac­countant must know much more than bookkeeping.

He must know the prin­ciples of analyzing bookkeeping records —that is, taking every separate item and discovering exactly what it means. He must know a great deal of law as it applies to businesses, especially tax laws and laws relating to an employer's duty to his employees. Many accountants have their own offices and work for several different companies, going from one to the other to examine and analyze their books; this is called public accounting, and the accountant who practices it must know a great deal about the actual opera­tion of many different kinds of business, and must pass an examination that makes him a Certified Public Accountant. financial statements The accountant shows the result of business operations by what is called a balance sheet. A balance sheet is divided into two parts. In one part is shown everything a company owns, whether in money or in things that are worth money. These are its assets. In the other part of the balance sheet, the accountant sets down everything the company owes, or must eventually be prepared to pay.

These are the company's liabilities. The difference between the assets and the liabilities is the company's net worth. This balance sheet, or financial state­ment, shows a company's net worth on some particular date that is the end of an The accountant prepares a "financial statement" or "balance sheet" to show how much a company is worth, but often it is hard for anyone but a businessman to understand it. Turn the page and see how the Corn Exchange Bank of New York made a simpler statement.