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The nature and purpose of accounting
Nature and purpose of accounting
Nature and purpose of accounting
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“P1 – describe the purpose of accounting for an organisation.”
In this task I am going to describe the purpose of accounting, why is it compulsory for businesses and organisations to keep a record of all accounts such as “profit/loss,” the amount of cash spent on “stock”, “bills”, “wages” and numerous other things related to the business that money is spent on . Accounting also covers the cash situation, sales levels, stock levels and credit given to customers as well as their bad debts.
“Record Transactions” For a business or organisation, keeping the business records accurate and updated is essential, necessary for the business to run smooth and make as much profit as possible. The owner or one of the staff members who has worked for the organisation for a long period of time must ensure all of the money coming in such as sales and money going out of the business such as expenses are recorded. If the business does not record anything, it may struggle and cause pandemonium and maybe find itself following payments or even forget to pay bills or find itself in
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Managing a business includes planning, organising and focusing on achieving a goal, for example expansion of the business.
Measure financial performance
Measuring the financial performance in a business is important as it will tell you where your business stands in terms of money and its mainly the level of performance during a specific period of time which decides whether you made losses or profits, for example it can tell you the value added to your business or return on assets and return on investment. It will also help the business owners in making decisions and come up with strategies to make their business suffer less losses and gain more profits.
P2 - Explain the difference between capital and revenue items of expenditure and income.
Capital
Financial records are very important aspects to any corporation and making sure the records are accurate is essential. Determining how a corporation is going to do is a guess but it is based on previous year's financial statements and that is a reason finical records are so important. Making a profit is a goal for any corporation.
John Cage has always been known as a controversial and new age composer. Some say that his pieces lack the very structure that makeup classic forms. I argue that John Cage’s work Living Room Music, despite instrumentation with no set pitch, has conclusive harmonies and is in the style of a Baroque suite. This is a strange concept for some because pitch has become such a focal point around harmonic analysis when in reality it can be determined simply by ensemble texture and dominate features.
Management accounting in organisation is very important for decision-making and to make the business more efficient and therefore increasing its profits. Is the process of preparing accounts that can help managers to make day-to-day and short-term decisions, by providing them with accurate and timely key financial and statistical information...
Managerial accounting has changed over the years. Managerial accounting focuses on more than the financial aspect. We will be looking at how managerial accounting affects the business world today. Business also look to the economy, federal taxes, and the financial market so it can make the best decisions for their business.
Cash and Accrual Accounting are two elemental accounting methods that are essential to keep records of the expenses and income of a business (Zarandi, et al., 2013).Therefore throughout this essay I will be discussing the advantages and disadvantages of each method in order to conclude which accounting method is more useful for a business. Cash accounting is more favoured especially for small businesses whereby the income is only counted when the payment is received and the expenses are practically paid whereas the accrual accounting method accounts for revenue when the sale takes place and the expenses are counted when the goods or services are received regardless of whether the receivables are literally received or if the payments are paid (Zarandi, et al., 2013). The accrual accounting method is considered the most favourable for businesses and Zarandi, et al. (2013, p. 245) supports this by summing up their argument that the accrual system is "understandable, reliable, comparable and relevant" and argue that the accrual method has become popular in the UK and the reason is because the information gained from accrual accounting provides a full reflection of the overall impact of 'managerial actions or endeavors on future cash flows than cash flow realizations in any given period.' Hence this clearly shows that the accrual method is more effective as the results from Zarandi, et al. (2013, p. 1) research shows that overall the Accrual method is better for "managing accounting affairs compared to in comparison to the cash accounting method."
Both accounting and finance deal with money and assets; however, they are categorically different concepts. This portion of the essay will discuss the dissimilarities between accounting and finance. Examples of different concepts will be given for both practices.
The accounting cycle is a series of steps starting with recording business transactions and leading up to the preparation of financial statements. This financial process demonstrates the purpose of financial accounting–to create useful financial information in the form of general-purpose financial statements. In other words, the sole purpose of recording transactions and keeping track of expenses and revenues is turn this data into meaning financial information by presenting it in the form of a balance sheet, income statement, statement of owner’s equity, and statement of cash flows.
Accounting dates back as far as first centuries, is the language of business. As everything has gone through many changes, accounting has also changed many times through out the centuries. It went from the use of abacus to the most advanced softwares, and computers. With these drastic improvements nowadays accounting, financial accounting and management are facing big challenges. From the presentation of the reports to communication to the users, investors, and owners, the accounting field has gained totally a new shape from two decades ago. Today with the dynamic change in every aspect of life, the accounting field has to act fast and be able to adapt these new changes and challenges in order to survive.
My interest in accounting was first sparked off by taking lessons related to accounting during my undergraduate study. It was through these courses that I got to know accounting, the language and basic tool of business, is integral to the success of all businesses or non-business, profit or non-profit organizations. Before that, my cognition about finance and accounting had been confined to the concept of commercial banks and desperately endless calculations. But the truth is that it is the science of accounting that offers us a broad and firm grounding in understanding the complexities of what makes a business successful and how to run a company in varying situations. Thus, it is no exaggeration to state that accounting is at the heart of
Accounting has been a living part of history since the Neolithic period and remains a prevalent and ever-evolving profession still to this day. This essay therefore proposes to look at the significance and role of history specifically related to the accountancy field. In order to substantiate this claim of the importance of accounting history, numerous benefits of accounting history will be presented. Factors such as the use of historical research and its availability thereof to constantly develop accounting policies will be discussed as well as how historical accounting practices can be used to understand current practice and assist in the training of individuals in the accounting field. Lastly, the importance of history in the development
I have taken a lot of time this semester to think about and focus on a career path. After much consideration, I am now planning a path to become a licensed accountant. Certified Public Accountants oversee financial operations and examine and make sure financial records are correct. Many people call accounting the “language of business”, because many of the decisions made by companies are not made without looking at an accountant’s report. This job is appealing to me because it is a job that has a routine, I would get to work with numbers, and it is a respectable job that not everyone can do. To pursue this career, I would have to obtain a degree in accounting or a similar degree, like a degree in finances, and pass the Certified Public Accountant exam.
The reason I decided to pursue a career in accounting is because I have always been interested in the business world and accounting is considered a basic tool of business. I have worked for small and large business firms; also in private and public sectors which helped me develop a strong linking with the industry as a whole and solidified my interest in accounting.
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 very important term to our modern society. It is the career for men and women who at the start have their eyes set on top positions in industry, management, government, and general business. Accounting is a basic need of every businessman, from the operator of a filling station to the government of the United States. It's so important to our society. None of the business organization can operate without is. They are there-somewhere-in every business. In small business, people use pen, ink and skill keep the records. In large business, modern accounting machines are used to operate. Men and women are directing these machines in the accounting process. Wise businessmen enter business must have some accounting knowledge.
Modern information system is now popular all over the world, it also change the accounting area. Instead of the old manual analysis, many companies making effort in developing a fitted accounting information system for themselves, as they realize the advantages that the new technology brings in - more efficient and accurate in processing, integrated data, detailed record etc. However, even though there are so many benefits, the functional system also brings challenges, making new requirements to the accountants and auditors. This paper will discuss the impact of technology to the accounting information system, as well as the necessary capability ethics that the accountants should learn in this 21th century.