0 оценок0% нашли этот документ полезным (0 голосов)
31 просмотров5 страниц
This document discusses the key aspects and functions of accounting. It notes that accounting aims to accumulate and communicate essential financial information about an entity's activities. While accounting rules are agreed upon, the ultimate goal is to provide useful information to external parties. The main functions of accounting outlined are: recording economic transactions, summarizing data into financial statements, communicating information, providing stewardship over resources, determining income, and complying with legal requirements. Accounting serves as a communication system between a firm and outside parties to facilitate decision making.
This document discusses the key aspects and functions of accounting. It notes that accounting aims to accumulate and communicate essential financial information about an entity's activities. While accounting rules are agreed upon, the ultimate goal is to provide useful information to external parties. The main functions of accounting outlined are: recording economic transactions, summarizing data into financial statements, communicating information, providing stewardship over resources, determining income, and complying with legal requirements. Accounting serves as a communication system between a firm and outside parties to facilitate decision making.
This document discusses the key aspects and functions of accounting. It notes that accounting aims to accumulate and communicate essential financial information about an entity's activities. While accounting rules are agreed upon, the ultimate goal is to provide useful information to external parties. The main functions of accounting outlined are: recording economic transactions, summarizing data into financial statements, communicating information, providing stewardship over resources, determining income, and complying with legal requirements. Accounting serves as a communication system between a firm and outside parties to facilitate decision making.
The Nature of Accounting and conventions are not discovered but
they are contrived and mutuallyagreed
According in its essence is a function that upon.( aims to accumulate the communicate informationessential to the understanding iv of the activities of an entity. It is an ) obstraction of the real worldeconomic events. The distinctive nature that makes Accounting as a means to an end: accounting a unique system is as follows :( Although accounting system is i characterized by a hostof rules, procedures and conventions, they are not the end by ) themselves. The ultimate end ofaccounting Accounting as a process: is to provide external information- communication system by gathering, Accounting is a process which involves compacting,interpreting and disseminating gathering, compacting,interpreting and economic data which gives a financial disseminating economic information in a representation of therelative economic systematic way.( rights and interests of the economy ii segments, in order to facilitate judgmentformulation and action taking by ) its users.( Stewardship function : v Accounting is a stewardship function. Its ) basic goal is to report onthe resources and obligation of the entity to the owners. Accounting as an art: Through the medium of financialstatements Accounting is more of an art than a science; it communicates to the interested parties of its logical foundation isnot deeply the contributions and relative rights ofthe embedded in scientific or natural law. It is economy segments the essentially and fundamentally utilitarian shareholders/owners, creditors and others.( innature, therefore, its methodologies are iii primarily based on expediency and upon actual day today needs of the business ) community.functions of accounting are as Concepts and conventions: follows:(
Since accounting is a process that aims at i
communicatingeconomic information, it ) must rely on a set of previously agreed concepts, conventions andrules. These rules Recording function: According is essentially a recordkeeping supplyreliable and dependable information function of the past, presentand future about the economic chronicles of the economic events of the business. The business for thepurpose of decision making recording function involves techniques by the interested parties.( ofinformation gathering and processing.( iv ii ) ) Income determination: Summarizing function: .Net income determination under the The next important function of accounting historical cost method lies atthe heart of is summarizing diverseeconomic data into the whole accounting methodology, says homogeneous group or unit called account. Campfield Income is the basic measurethat It is most important function ofaccounting provides information about the periodic since just like our language system; progress of business. It also provides the accounting communicates economic basicrationale for being in business.( informationto its users through these v accounts.( ) iii Preparation of balance sheet : ) Balance sheet is very often stated as a Accounting as a medium of communication statement offinancial condition that between the firm and the external parties: purports to show Accounting is not an end in itself, but it exists to serve a purpose. The purpose is to the economic resources, obligations and owner.sequities of the business at periodic interval of time.. Despite difference of opinions about management for the purpose of exercising theexact nature of balance sheet, control over many functional areas of accountants have found its preparation business.( extremely useful.( vii vi ) ) Compliance with legal requirements: Control function: In modern days accounting is not merely an Accounting is a special type of calculative act ofprudence to exercise control, but its service that comes handy tothe necessity arises from the need of compliance with manylegal requirements. The broader field of accounting includes the For example, the provisions of the Indian use of these accruals. In addition, Companies Act makes it obligatory accounting encompasses the following activities: Acommon question is whether there is any Creating the chart of accounts difference between accounting and bookkeeping. We will Setting up the general ledger begin with bookkeeping, since it is essentially a Designing the financial statements subset of the larger topic of accounting. Bookkeeping is the recordation of Issuing customized management basic accounting transactions, such as: reports to address specific issues Issuing invoices to customers Altering the classification or Recording invoices from suppliers recordation of transactions to meet certain accounting standards Recording cash receipts from Creating a budget and comparing it customers to actual results Paying suppliers Compiling tax returns from the Recording changes in inventory financial information Processing payroll Creating a set of controls within Processing petty cash transactions which the financial system operates Designing a record keeping, These transactions are mechanical in nature; that is, the bookkeeper follows a archiving, and document destruction prescribed set of procedures on a repetitive system basis to record a common activity. These Usually, there is at least one trained common bookkeeping tasks are entirely accountant responsible for the accounting adequate for the accounting needs of a operations of a medium to large-sized small business. business, and who sets up the procedures A bookkeeper could compile financial that are then followed by a larger number statements from the transactions just of bookkeepers. described. However, those financial In short, the difference between accounting statements would be incorrect to some and bookkeeping is that bookkeeping extent, because they would not include the focuses on repetitive business transactions, following additional actions that are usually and so is a subset of the much larger set of handled by an accountant: tasks that can be encompassed by Accruing or deferring expenses accounting.
Accruing or deferring revenue
There are also significant differences monthly basis at a minimum. The ongoing between the bookkeeper and accountant result is the creation of an organization’s positions. The bookkeeper role is broad- financial history that can be used in a based, with one person typically handling all variety of ways, as it gives managers a of the accounting transactions for a small snapshot of the firm’s financial health and business. The bookkeeper tends to be very wealth at any given time. experienced, but is more likely to be lacking The Two Main Forms of Accounting in formal accounting training. A bookkeeper with a great deal of responsibility may be But the collected data are only meaningful referred to as a full-charge bookkeeper. if used; to use data properly, managers Conversely, the accountant is more likely to break the accounting function down into work exclusively on a specific area, such two primary forms--managerial accounting as fixed assets or the general ledger, and is and financial accounting. While both rely on more likely to have formal training in the the same underlying financial data stream, accounting function. There is also a career their main difference lies in their focus and path for accountants, which leads to the time orientation. With managerial assistant controller and controller positions. accounting, the focus is internal and looking forward, but financial accounting, the focus is external and looking back. Managerial Accounting Businesses both large and small, public and private, for profit and nonprofit, are driven Managerial accounting is used internally for by numbers. Whether it’s tracking sales, planning and for moving an organization managing inventory or making payroll, forward in a financially sound manner. With smart managers know that keeping tabs on this function, accountants look at the those numbers is crucial, but without a solid historical financial data stream as well as accounting function, that task can become the current economy and make an organizational nightmare. Organizations assumptions about trends and what these seeking a well-rounded accounting function trends mean for the organization’s future. need to consider several aspects of Managerial accountants look at the accounting beyond just simple debits and organization in segments, either by credits. department, by region or by product lines for instance, and estimates are made about What is the Purpose of an Accounting sales expectations, performance, pricing, Function? costs and work force needs. With The primary purpose of any accounting managerial accounting, smart managers try function is that of ongoing financial record to predict an organization’s financial future keeping. Monetary information of all types- and make sound decisions based upon -operational expenses, salaries, donations, those expectations. capital expenditures, investments, cash Financial Accounting flow, utilities--should be tracked on a With financial accounting, the emphasis is during the period of the Mauryan Empire. on looking at past data with the objective of His book "Arthashasthra" contains few determining an organization’s value as a detailed aspects of maintaining books of whole. Shareholders and investors will use accounts for a Sovereign State. the information to decide if a public The Italian Luca Pacioli, recognized as The company is undervalued and worth Father of accounting and bookkeeping was investing in or overvalued and should be the first person to publish a work avoided. Creditors will use this same on double-entry bookkeeping, and information to decide whether a nonprofit introduced the field in Italy.[7][8] organization is a good risk before lending money. Governmental agencies will use this The modern profession of the chartered same information to levy taxes on for-profit accountant originated in Scotland in the organizations. Most importantly, though, nineteenth century. Accountants often financial accounting is required and, as it’s belonged to the same associations as shared externally, it must be precise, thus solicitors, who often offered accounting financial accounting must conform with services to their clients. Early modern generally accepted accounting principles to accounting had similarities to avoid legal issues. Managerial accounting today's forensic accounting. Accounting however, since it is used internally, need began to transition into an organized not be quite so precise, nor is it mandatory. profession in the nineteenth century,[9] with Thus, while organizations must report local professional bodies in England financially accurate information to the merging to form the Institute of Chartered public, they remain free to do as they wish Accountants in England and Wales in 1880. for internal planning purposes.
The history of accounting or accountancy is
thousands of years old and can be traced to ancient civilizations.[1][2][3]
The early development of accounting dates
back to ancient Mesopotamia, and is closely related to developments in writing, counting and money[1][4][5] and early auditing systems by the ancient Egyptians and Babylonians.[2] By the time of the Roman Empire, the government had access to detailed financial information.[6] In India Chanakya wrote a manuscript similar to a financial management book,
"The Language of Business: How Accounting Tells Your Story" "A Comprehensive Guide to Understanding, Interpreting, and Leveraging Financial Statements for Personal and Professional Success"