How would you explain accounting (its meaning and purpose) to someone who knew nothing about it?
Once upon a time there was an aspiring businessman named Dusty. Dusty noticed the lack of doughnut shops in his quaint town. After a time of consideration, the businessman decided to open his doughnut shop and began developing an operations blueprint for his retailer; Dusty 's Doughnuts. While Dusty is a very creative and driven business man, he was not experienced in professional accounting. In order to properly understand the accounting knowledge in which the business would require, Dusty hired an accountant named Antonio. Antonio has worked with many individuals who hoped to open a small business and is skilled at explaining the meaning and
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Based on Dusty 's Doughnuts operations blueprint, there will be thousands of transactions that will need to be processed every year. Antonio says that accounting electronic software will enable Dusty to complete electronic recording, storing, and retrieval of the various transactions that will occur. The various transactions that may be generated include: putting in personal funds into the start-up business and therefore buying shares in Dusty 's Doughnuts common stock, the purchasing of equipment such as doughnut making ovens, funds occurred from wages and expenses, and the collection of funds earned. Dusty will be managing the money and transactions in which his business deals with and therefore be participating in accounting steps. The three main Financial Statements include the Income Statement, the Balance Sheet, and the Statement of Cash …show more content…
Previously, I found measuring business success against each other to be challenging and chaotic. Many business vary in so many ways and there is little ways to find a uniform summary to measure all of these various businesses next to each other. I found accounting to be almost philosophical as we as humans have developed labels such as “expenses” and “assets” along with a set of rules to go along with these labels in order to measure the elements to make up a business. We set these rules based off of societal ideas created around imperfect institutions such as integrity (we want accounting to be set at a fair and efficient standard). We as humans have come up with an incredibly complex system in order to measure other complex systems. Accounting is the constitutional control for businesses ranging from sole proprietorships to corporations. While business are intrinsically flawed, accounting provides a strict system of control for a chaotically humane system. Contrary to my original perception, accounting is not as simple as adding; it is the concrete yet philosophical approach at controlling the system that rules the world. Our world is made up of businesses and therefore accounting is the universal constitution for
Accounting reveals profits or losses and it also discloses the value of assets, liabilities, and equity accounts. Journal entries have to be precise and records have to be accurate. What makes tax accounting so engaging is that most importantly you have the goal of making the taxable income as low as you can so you can get as large of a tax break as possible. Additionally, you have to keep up with tax policies that can change every
Under the pressure brought by Mr. Wiles’ arbitrary management style, senior managers were just busy with making numbers, but not feasible plans. Such unreasonable management style resulted in the emergence of irresponsible behaviors. Besides, The Company emphasizes “make the number” instead of “make the accountable number”, which probably resulted fraudulent activities. The History department of MiniScribe’s accounting and public reporting function was directed not to question the number received from the Control, also called as the controllers for the company’s operating and manufacturing division. It’s so ironic that directors discouraged responsible employees’ responsible behaviors.
Wolk, H., Dodd, J., & Tearney, M. (2003). Accounting Theory: Conceptual Issues in a Political and Economic Environment (6th edition ed.). South-Western College Pub.
Debbie Dusenberry, owner and founder of The Curious Sofa, found her business failing after years of national acclaim, growth and success (Katz & Green II, 2013, p. 409). Despite her apparent aptitude at entrepreneurship, Ms. Dusenberry made two monumental mistakes: she never created a business plan and never monitored and/or analyzed the financial health of her business. She allowed the success of her organization to propel its growth, in size and costs, yet she did not manage her cash flow in a way to continue operating profitably. There is a vast difference between profits and cash flow. Profits are the revenue an organization has earned after accounting for expenses (p. 414).
Accounting is basically a service activity. Its purpose is to provide quantitative information that principally used by the managers, investors, tax authorities, and other decision makers to make the financial decisions within companies, organizations, and public agencies. Accounting is also widely known as the “language of business.” An accountant measures, communicates, and interprets financial activities. They prepare financial statements or reports for individuals, businesses, government agencies, or other non-profit organizations. They use the accounting systems to categorize the expenses and income to the typical groups. They also keep tract of the money received or paid out to see if the transactions are accurate and complete. Accountants are familiar with the computer operation. They use the computer...
The fist step is to analyze and classify events. In order to enter the transactions, the recorder must first decide what needs to be recorded. An event should be recorded "if it is measurable, and is relevant and reliable" (Kieso, Weygant, & Warfield, 2004). Although there are some events that increase the assets of the business, they are not all able to be recorded. For example, hiring a highly skilled employee can be seen as acquiring an asset, but there no way to measure the asset, so it is not recorded. In my experience, management usually makes these decisions. The source documents are complied and given to the accounting department.
Albrecht, W. S., Stice, J. D., Stice, E. K., & Skousen, k. F. (2002). Accounting Concepts and Applications. Cincinnati: South-Western.
ABC LTD COMPREHENSIVE INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2012 NOTE 2012 Revenue 2 828,500 Cost of sales 3 (460,000) Gross profit 368,500 Other income 4 2,500 Operating expenses 5 361000 Profit before income tax 10000 Income tax expense (30%) 3,000 Profit for the year 7000 Other comprehensive income change in revaulation surplus 38500 Other comprehensive income for the year, net of tax 38500 Total comprehensive income for the year 45500 ABC LTD STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2012 NOTES 2012 ASSETS Current assets Cash and cash equivalents 6 100500 Trade and other receivables 7 45,200 Inventories 8 87700 Other current assets 9 7000
Lucas Pacioli was the first to describe a system of debts and credits in accord with journals and ledgers in 1494. These basics came together to be the concoction for what is known as accounting. Since the formal establishment of accounting in 1494, the field has expanded as the demands of the ever-changing economy became greater. The industrial revolution created the first jump in the field forcing the creation of sectors within. Since this first creation of sectors, accounting as a field has been creating more specific sects to accommodate a large variety of areas. The most common and large sects created this far include public and private accounting. Although both sects carry the same basis for their work, the variation between the two lies in their demographic, demands, and decoration.
The overall purpose of cost accounting is to advise top administration and the management team on the most suitable and cost effective methods and actions to employ based on cost, capability and efficiencies of a given product or service. It can be defined as the method where all the expenditures used during execution of business activities are gathered, categorized, examined and noted down (Horngren & Srikant, 2000). Once these numbers are gathered and recorded the information is used to determine a selling price and/or to identify possible investment opportunities. Although the principal aim or function of cost accounting is to help the business administration with their decision making and business planning process, the cost accounting data
Accounting is the pillar of every company to measure its growth, loss, revenue , capital, its really specify the real terms in foam of figures and sometimes in tables, in accounting there are certain rules are obtained to make more accuracy while playing with figures.
Different types of theoretical perspectives have been used over the years to justify why business organizations involved in CSR activities and voluntarily disclose of CSR information (Patten 1991; Arman& Siti-Nabiha 2009; Bayound et sl.2012). These CSR theoretical perspectives can be categorized into positive accounting theory and normative accounting theory. Normative accounting is a theory to prescribe how an accounting particular practices should be undertaken (Deegan and Unerman 2011). Kristian (2013) argued that normative theories lacking empirical background because they are not based on observations. In contrast, positive accounting theory is based on logical deduction (empirical observations).Therefore, it concentrates on the relationships between individuals who provide resources to a company (stakeholders) and how accounting is used to these relationships (Deegan and Unerman, 2011).
Accounting itself is a system that people has been using for thousands of years, the system records financial information about a person or business, businesses use it in order to be able to keep and track their financial accounts and other financial information in a safe and efficient way. (Brooks, 2012)
Accounting aids the government and organisations in decision making for their financial stability. This numerical data helps solve real life problems and contributes to how the economy and businesses perform.
Accounting is a vital element of business. It records the way a business has grown and, after analyzing figures, suggests the way it should go in the future. Furtunes are gambled on the advice of accountants.