Accounting Overview

Our modern economy requires successful business owners to understand the relationship between economics and accounting and finance. According to Block & Hirt (2005), the study of economics provides a structure of decision making in the areas of risk analysis, pricing theory through relationships in supply and demand, comparative return analysis, and many other more important economic forces. Business owners and financial managers must understand the institutional structure of the Federal Reserve System, the commercial banking system and the interrelationships between the various sectors of the economy. Understanding these various sectors of the economy are part of the key planning strategies that will improve their day-to-day business decision making. In essence, gross domestic product, industrial production, disposable income, unemployment, inflation, interest rates, and taxes are the important variables of our economy which must fit into a business owners' decision model and need to be applied correctly in their strategy planning (Block & Hirt, 2005, p 5). Business owners face tough and difficult decisions on a daily basis not only from the external economic factors