Accounting is a system for identifying, measuring, recording, and communicating financial information about an organization’s activities to permit informed decisions by users of the information. Bookkeeping is the process—made up of mechanical “steps”—of recording transactions and maintaining accounting records. While bookkeeping is part of accounting, accounting is viewed as the complete information system that communicates the economic activities of a company to interested parties. Accounting is often referred to as the “language of business” because it communicates information about economic activities of a company that help people make decisions. 2. Accounting information is demanded or needed by decision-makers both inside and outside the business to provide information about business activities and finances so that informed decisions can be made. Five groups that create the demand for accounting information and their uses of accounting information are described below. (1) Managers need accounting information to plan and make decisions about the business (e.g., predicting the consequences of their actions and deciding on which actions to take) and to control its operations (e.g., evaluating the effectiveness of their past decisions). (2) Employees use accounting information about their employer to aid in planning their careers (e.g., judging the future prospects of the company). (3) Investors (owners) need accounting information about a business to evaluate the future prospects of a business and to decide where to invest their money. (4) Creditors (lenders) need accounting information to decide whether or not to lend money or extend credit to a business. (5) Governments need accounting information about businesses to determine taxes owed by businesses, to implement a variety of regulatory objectives, and to make national economic policy decisions. 3. An accounting entity is a company that has an identity separate from that of its owners and managers and for which accounting records are kept. There are three main forms that accounting entities take: a sole proprietorship, a partnership, and a corporation