Accounting is an art and science that have evolved over time into a highly complex system of measurement, assessment, reporting, interpretation, and management. Accountancy or accounting is the measurement, interpretation, and reporting of financial and/or non-financial information about organizations including corporations and businesses. The purpose of accounting is to facilitate decision making by providing information needed to make informed decisions about strategic, operational, and investment decisions. Accounting information is used to prepare financial statements which are prepared for reporting to investors, regulatory authorities, management, and other organizations. Accounting is a part of the science of public accounting which includes auditing, rating, and advising aspects of the practice.
The word ‘accountancy’ is derived from the Latin phrase ‘ad minus facit’. The first element of the word ‘account’, an agent that shows the title of an account or document. Other elements include ‘knowledge’ or ‘filtering’, ‘doing’ or ‘obtaining knowledge’. It is important to note that accounting applies to all types of financial transactions. These include sales, purchases, revenue, expenses, and net income. It also encompasses human knowledge associated with the preparation and review of financial statements and data to provide reasonable assurance regarding the accounting records of the enterprise.
The fundamental method of accounting is called basic accounting which covers the financial transactions of a normal commercial enterprise. All elements of the financial statements of an enterprise are reported in the financial statements. The first step in accounting is to obtain and prepare the information needed for the preparation of the financial statements. This includes gathering information from the current affairs of the enterprise, information relevant to the preparation of financial statements, journals, and handbooks. These forms are called ‘paperwork’ and are required to be submitted to the accountant concerned for review and comment prior to the preparation of the final accounts.
Various aspects of the process need to be considered before the final decision is taken as to which accounting method will be applied. This includes determining what information needs to be collected, how it will be recorded, analyzed, and presented to make the necessary decisions. One of the most significant considerations is likely to be the ultimate objective of the activity being conducted. Most accountants will consider whether a business needs to be portable to other parties involved in the transaction. While some businesses make their activities entirely confidential, other companies consider customer privacy to be a critical issue and therefore a process by which they come to a determination as to the method of accounting.
A major portion of an accounting professionals job is to familiarize themselves with the latest accounting terminology and its various uses, including balance sheet reports, profit and loss statement reports, statement of cash flows, and balance sheet analysis. One of the most common accounting terminology used by accountants is also one of the most confusing: journal entry. Accountants must learn the various methods of entering data into the journals, the effect of certain transactions on the books, and the interpretation of journal entries that have been entered into the system. This can be a challenging task for accounting majors.
Accounting degree programs that focus on managerial accounting tend to be more specialized and comprehensive than those specializing in accounting itself. These programs will usually begin with an introduction to basic accounting terminology and the principles of managerial accounting. The emphasis will then be placed on how to effectively use accounting principles to make financial decisions. In general, managers are expected to make decisions concerning funding, budgeting, allocation of resources, marketing, sales, production, and waste management. In addition, managers are also expected to make decisions concerning external organizations that affect internal resources.
Some of the areas that will be covered in a managerial accounting degree program include corporate law, public accounting, economics, finance, accounting theory, accounting reporting, auditing, and administrative practices. In many instances, accountants are required to undergo training regarding specific areas of the field. For example, students may have to learn how to deal with internal and external government regulations, how to comply with billing and accounting laws, and how to properly use company records to meet legal requirements. While these classes can be time-consuming and tedious, preparing for this information before taking the exam is crucial to successfully passing the exam and earning the CPA license. After completing the degree program, graduate students can apply to a CPA National Academy to be able to take the national exam upon completion.
The main objective of accounting is to create financial statements or reports that provide management and users with accurate and up-to-date information regarding the day-to-day activities of a company. The purpose of accounting is to facilitate the preparation of sound and effective financial statements for decision-making by stakeholders and by owners of the company. Accounting involves the process of collecting, organizing, interpreting, and communicating information needed for making sound financial decisions. Accounting is an essential component of corporate management as it assists in achieving goals through efficient financial transactions. There are different stages involved when it comes to accounting. The first stage of accounting refers to the collection of information; the next stage is to prepare the information for analysis; and the last stage is to generate reports and statements of the financial transactions.