The Role of Accounting
Business accounting is a field that has evolved throughout history due to the need for accurate information to optimize business performance. Accounting or accountancy is simply the science of recording, analyzing, and communicating information about businesses and other financial non-financial entities. The need for reliable, timely, comprehensive, and accurate information has driven advancements in accounting practices over time. As a result of the need for better accounting practices, many professional associations now conduct meetings, conventions, and seminars on matters of business accounting.
The first step towards understanding accounting is understanding the different components that make up accounting. The three major components accounting most often discusses are: financial statements, accounting procedures, and accounting policies and procedures. These three components are extremely important when determining an individual’s accounting position. More specifically, these three components are: Financial Statements, accounting process, and auditing work flow.
A financial statement is simply a summary of all the financial transactions that occurred during a specified period of time, with regards to the business. For example, if a company sells products to customers at a certain price on a particular date, then the sales amount is reported in the financial statement. In order to understand the accounting system, one must first understand the difference between an accounting system and an accounting procedure. A method is something that accounts for the same events that are listed in a financial statement. On the other hand, an accounting procedure is a specific action that is taken in order to reach a particular result.
Another component that greatly impacts the accounting profession, are tax returns. When an individual obtains their tax returns, they are required to enter and report the appropriate data. In order to comply with the various accounting regulations and laws, accountants must regularly submit tax returns to their various regulatory agencies. Proper and accurate reporting is necessary for the accountants to accurately and fairly calculate their financial accounting fees and expenses.
The basic function of a CPA or Certified Public Accountant is to help the public understand the financial records that are submitted by businesses in order to meet their accounting needs. In turn, they ensure that these reports are accurate and complete. With this being said, it is quite obvious that most accountants are required to undergo extensive education before they can even begin working in the field. After all, the accounting framework of a particular business is very complex and intricate. Therefore, it is essential for the accountant to be well-informed on all of the various techniques and strategies that are utilized in order to arrive at the correct and comprehensive financial statements.
The importance of accounting information also extends beyond the individuals who use them. Businesses rely on their accountants in order to make correct and comprehensive financial statements to share with their external users such as shareholders, lenders, tax authorities, auditors and other interested parties. Apart from their internal users, businesses also rely on outside experts such as attorneys, accountants and financial analysts to help them better understand their financial data. Without the correct and comprehensive accounting information, businesses would be unable to arrive at any kind of objective decision regarding their future course of action.
Businesses cannot undertake operations and growth without any outside help or advice. In fact, even if a business is successful in bringing in enough revenue, it is essential for the entrepreneur to have access to external advice regarding the efficiency and profitability of their business venture. This is where the role of accountants becomes important. By providing timely and comprehensive balance sheet reports to their clients, accountants show the investors and other external users that a business is actually earning profits from its operations rather than wasting valuable time and resources in carrying out an expensive and extensive project.
Most entrepreneurs, given the responsibility of coming up with accurate financial statements, find it difficult to meet the challenge. There are many software programs and automated systems that offer assistance to accountants in coming up with effective and efficient balance sheet reports. To begin with, most of these programs are designed for businesses that are still growing and have not yet reached any serious business level. However, as the business grows and progresses into its later stages, these programs will be of great help to such entrepreneurs.