You must know, What is accounting?

What is Accounting, You Know?



Everyone who has worked in an office should resort to accounting. These are the push and pull people who support the business. However, they did much more than that. Sometimes referred to as "bean counters," they also track profits, costs, and losses. Unless you run your own business and act as your own accountant, you won't know how profitable - or not - your business is without some form of accounting.

It doesn't matter what you do, even if all you do is the balance in the checkbook, it's still the account. It is part of a child's life. Collecting the benefits, and spending them all at once - that's the principle of accounting.

In which company is accounting important? Well, farmers need to take careful notes. Many of them run their farms year after year, taking loans to grow crops. If the year was good and profitable, then they could pay off the loan; If not, they may have to continue the loan and charge additional interest.


Every company and every person should have some type of accounting system in their life. Otherwise, money could be wasted from them, as they do not know how much they are spending and whether they can expect a profit or loss from their business. If you're smart, always stay on top of the accounting, whether it's a billion-dollar corporation or a personal checking account. Failure to do so could mean anything from bounced checks to losses for the company's shareholders. Both scenarios could be devastating.

Accounting is fundamentally information, and this information is published periodically in businesses in the form of an income statement or an income statement.

Everyone who has worked in an office should resort to accounting. These are the push and pull people who support the business. However, they did much more than that. Sometimes referred to as "bean counters," they also track profits, costs, and losses. Unless you run your own business and act as your own accountant, you won't know how profitable - or not - your business is without some form of accounting.


It doesn't matter what you do, even if all you do is the balance in the checkbook, it's still the account. It is part of a child's life. Collecting the benefits, and spending them all at once - that's the principle of accounting.

In which company is accounting important? Well, farmers need to take careful notes. Many of them run their farms year after year, taking loans to grow crops. If the year was good and profitable, then they could pay off the loan; If not, they may have to continue the loan and charge additional interest.

Every company and every person should have some type of accounting system in their life. Otherwise, money could be wasted from them, as they do not know how much they are spending and whether they can expect a profit or loss from their business. If you're smart, always stay on top of the accounting, whether it's a billion-dollar corporation or a personal checking account. Failure to do so could mean anything from bounced checks to losses for the company's shareholders. Both scenarios could be devastating.

Accounting is fundamentally information, and this information is published periodically in businesses in the form of an income statement or an income statement.


Basic accounting principles



William Patton, a professor of accounting at the University of Michigan, defines accounting as performing one major function: "Facilitating the management of economic activity.

This function has two closely related phases.

1. Measuring and classifying economic data.

2. Communicate the results of this process to interested parties.


For example:

Company accountants measure profit and loss periodically for a month, quarter, or fiscal year and publish these results in an income statement called the income statement. This data includes items such as accounts receivable (what the company owns) and accounts payable (what the company owns). It can also get very complicated with topics like retained earnings and rapid depreciation. It exists at higher accounting levels and in organizations.

However, much accounting also takes care of basic bookkeeping. It is a process that records every transaction; Every bill is paid, every penny is due, every dollar and cent is spent and it accrues.

But company owners, who may be individual owners or millions of shareholders, are most interested in the summary of these transactions included in the financial statements. The financial statements summarize the company's assets. Asset value is how much it costs when first purchased. The financial statements also record the source of these assets. Some assets are in the form of loans that must be repaid. Income is also a business asset.

In what is called double-entry bookkeeping, liabilities are also summarized. It is clear that the company wants to show a larger amount of assets to offset its liabilities and show a profit. Managing these two components is the essence of accounting.

There is a system for doing this. Not every company or individual can create their own accounting system; The results will be messy!


Accounting principles

If all the participants in the accounting process follow their own system, or don't follow the system at all, then there is no way to know whether the company is profitable or not.

Most companies follow what are called Generally Accepted Accounting Principles, and there are countless libraries and bookstores dedicated solely to this topic. Unless the company states otherwise, anyone reading the financial statements can assume that the company has used the System.

If that is not a principle used in the preparation of financial statements, then companies need to explain other forms of accounting used, and must avoid using titles in their financial statements that could mislead those who examine them.

Accounting System is the gold standard for preparing financial statements. Not disclosing the use of principles other than the Accounting System makes the company legally liable for data that is misleading or misunderstood. These principles have been codified over the decades and govern the effectiveness of the company's accounting methods and financial reporting systems. Different principles have been established for different types of business entities, such as non-profit and non-profit companies, governments and other institutions.

However, Accounting Systems are not fixed. They are guidelines and are therefore often open to interpretation. Sometimes a guess has to be made, and it takes a sincere effort to be precise. You must have heard the phrase "creative accounting" and that's when the company pays a little (or a lot) to make its business seem more profitable than it really is. This is also called number massage. This can get out of hand and quickly turn into accounting scams, which are also called cooking books. The consequences of these practices can be devastating and destroy hundreds and thousands of lives, as in the case of Enron, Rite Aid and others.

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