Accruals accounting
Maria Malone says: 'The accruals principle or accruals method means that events in a particular reporting period, for example sales of goods or purchases of supplies, are recorded in that period, rather than when _ money is actually received or paid out, which may happen in a later period.'

Profit and loss
'The profit and loss (P&L) account records the profit - the money we make - or the loss - the money we lose - during a particular reporting period, using the accruals principle.

'In our case, our accounts show sales from books, magazines, television advertising, etc. during the period. Then we show the cost of goods sold (COGS), for example labour costs - cost of employees' salaries - and the cost of materials.

'Then we take away general expenses - the costs related to making these sales such as salespeople's salaries, rent for buildings, etc. There is also the cost of depreciation - this is not an actual sum of money paid out, but is shown in the accounts to allow for the way that equipment wears out and declines in value over time and will have to be replaced. This leaves us with our operating profit.

'Then we subtract the interest payable on money we have borrowed in the form of bonds and bank loans. This gives the profit on ordinary activities before tax or pre-tax profit.

'Sometimes there are exceptional items to report, for example the cost of closing a particular operation, but fortunately this does not happen very often.

'Of course, we pay tax on our profits and in the UK this is called corporation tax.'

Earnings
'From the profit after tax, we usually pay dividends to shareholders, and you can see the figure for dividends per share. However, when business is bad, we may not do this - we may pass, omit or skip the dividend. Profit after tax is also referred to as earnings.

'Naturally, we don't pay out all our profit in dividends. We keep retained earnings - some of the profit to invest in our future activities. 'You can look at profitability in terms of earnings per.share (EPS), even if some of these earnings are retained - kept by the company and not paid out in dividends.'

I recently saw a student on a university campus wearing a T-shirt with the phrase 'Future accountant'. Given the profession's traditional image problem, it must have been ironic, mustn't it?

Perhaps not. There are signs that accountancy is putting its traditional image problem behind it. Increasing numbers of graduates are applying to join the profession, motivated not just by the prospect of high salaries but also by a change in perception. Ironically, it is partly its association with the twenty-first century's biggest financial scandals of Enron and WorldCom that has made accountancy become, well, sexier.

At the forefront of this image makeover is the specialism of forensic accounting, with its suggestion of crime scene investigators and technicians in white coats. In reality, a forensic accountant's work is chiefly concerned with any investigation of financial data which will eventually be used in some form of litigation. Some of them work for law enforcement agencies gathering evidence to support fraud and bribery charges. Others are expert witnesses who testify on either side in financial dispute cases.

While it might not always be CSI Miami, forensic accountants do need to develop some special skills which relate to their roles as investigators. For instance, a forensic accountant's work can make them crucial figures in high-profile criminal cases like Enron, so a confident manner in court can be helpful. ln addition, a systematic and analytical mind is essential. For example, in a fraud case, they may need to search financial records thoroughly, looking for patterns of similarities and coincidences that might indicate a cover-up. Imagination - not a characteristic traditionally associated with accounting - is also part of their skill set, as they dig deeper and try to get into the mind of suspected fraudsters.

Although the term forensic accounting is relatively recent, the importance of accountants in legal matters has a long history. The most famous case in which forensic accountancy has provided the pivotal evidence was in the conviction of the notorious Chicago gangster Al Capone. While Capone's criminal activities had included protection rackets and murder, he was finally convicted on the apparently lesser charge of tax evasion. Elmer Irey, an official at the US Inland Revenue Service, believed that Capone's conviction could be obtained on the basis of a Supreme Court ruling that the income from organized criminal activity was also subject to taxation. A team of investigators spent several years gathering evidence on Capone's net worth and expenditure, sometimes working undercover as members of his criminal gang. They ultimately succeeded in assembling the documentary evidence needed to convict him.

Many believe that future demand for forensic accountancy services will only get bigger. Stories of scams and frauds emerge daily in the media, and, against the background of Enron and WorldCom, the problem of white-collar crime is being taken increasingly seriously by policy-makers. The US Sarbanes-Oxley Act is just one example of this change in attitude.

But it's not just in the area of white-collar crime that forensic accountants will find future employment. Terrorists require money for their activities but need to conceal their sources of funding to avoid capture. The role of the forensic accountant will be to reveal the money trail from terrorist suspects back to their sponsors. Their importance has recently led one senior British politician to liken forensic accountants to the fingerprint experts of previous generations.

The future looks bright for accountancy, and there are enough exciting roles in the profession to ensure that its image is not quite what it once was. So, in case you run into someone wearing a 'Future accountant' T-shirt, think before you congratulate them on their irony. They might just be serious