Concept of Accounting

Perspective of Accounting 

     Many people believe accountants are individuals who are sat in an office or stall tied at desk all day long computing and filling burdensome book account sheets. But accounting experts do large more than calculate and register business operations and transactions. A major in accounting provide chances to the new graduated person to choice among a variety of job position such as bookkeeper, finance and marketer analyst or human resource employee. Accounting major is often eluded with some kind of contempt and fear because accountants allegedly do tedious and burdensome work. However, it is certainly sure that excellent business people should be acquainted about bookkeeping in order to succeed in their respective entrepreneurial areas. Nowadays, professional accountants broaden their vision in an unlimited horizon of new opportunities. Also, they have become the mentors, leaders and even owners of profitable companies. Moreover, America offers tremendous opportunities for accountants in both local and international markets. Individuals who graduates of accounting degree not only can work as bookkeepers but also in many other areas of interests as public and private sectors. Accounting degree should be my prioritizing goal because of its high demanding profession, limitless opportunities and its determining importance. 

    Accountants have tremendous chance of getting contract in any business company. According to the National Association of Colleges and Employer’s 2008 job outlook survey, accounting is the number one bachelor’s degree in demand by employers. Not only accountants are demanded for working in the accounting field but also in many other business areas. Accounting has been known as the language of business, and knowing it increases the chances of becoming a valuable resource for any company. After graduating of bachelor degree in accounting an individual can become public accountant who provides auditing, tax and consulting services to businesses and can either work for a firm or for themselves. Also, a person graduated in this field can choose to work for a private firm. In this sector, the individual just work for one company and it provides the opportunity to prepare budgets and financial information for it. Accountants has the chance to work for the government if he or she prefers. In this sector they specializes in monitoring the distribution of funds. The chances of getting a job after graduating in accounting career is close to a hundred percent probable. 

     Many opportunities come in an always expanding and volatile market and the advice of the accountants are very crucial for a sustainable economy. Those who are interested in expanding their practices look beyond the traditional bastion of practice tax and audit practice and exercise their view. Experts in accounting stare at promising future on business valuation which has received considerable attention recently for many business experts and falls under the larger category of “New Finance.” Therefore, accountants view business valuation as an alternative source of income. They are perceived by business owners to know and understand his/her clients business so that accountants are considered as independent and objective advisors in profitable corporations. Each time small and enormous companies become more and more dependable of professional accounting. In a globalized economy accountants have tremendous chance of extends their profits. Accountants can be at a center of trading business going both in and out of United States. For example; North American Free Trade Agreement (NAFTA) offer great opportunities for professionals of America and other countries in the accounting industry. 

Works Cited

Balwin, J. (2010, Feb 25). Perks of being an accountant. University Wire Retrieved from http://ezproxy.library.csn.edu/login?url=http://search.proquest.com/docview/1532348268?accountid=27953

Bhattacharya, S., & Braun, G. P. (2001). Business valuation: An emerging area of practice for accountants. The National Public Accountant, 46(3), 15-16. Retrieved from http://ezproxy.library.csn.edu/login?url=http://search.proquest.com/docview/232342406?accountid=27953

Chu, L. (1998). Accountants abroad. CMA, 71(10), 12-15. Retrieved from http://ezproxy.library.csn.edu/login?url=http://search.proquest.com/docview/197796539?accountid=27953

Clolery, P. (1994). Accountants reaching across borders. The Practical Accountant, 27(2), 38. Retrieved from http://ezproxy.library.csn.edu/login?url=http://search.proquest.com/docview/208245330?accountid=27953

Global opportunities for chartered accountants. (2001, Aug 30). The Belfast News Letter Retrieved from http://ezproxy.library.csn.edu/login?url=http://search.proquest.com/docview/324686332?accountid=27953

Gurnick, D. (1992). The accountant's role in assisting franchisors. The CPA Journal, 62(12), 48. Retrieved from http://ezproxy.library.csn.edu/login?url=http://search.proquest.com/docview/212297242?accountid=27953

Hall, L. (2003). Bright job market for accountants. Atlanta Business Chronicle, 26(1) Retrieved from http://ezproxy.library.csn.edu/login?url=http://search.proquest.com/docview/235203591?accountid=27953

Peisley, T. (2000). Accountants as experts. Charter, 71(2), 66-68. Retrieved from http://ezproxy.library.csn.edu/login?url=http://search.proquest.com/docview/195575740?accountid=27953

Sheinker, C. (1999). Factoring: An accountant's perspective. Accounting Today, 13(10), 51-51,55. Retrieved from http://ezproxy.library.csn.edu/login?url=http://search.proquest.com/docview/234440886?accountid=27953

 

Concept of Accounting:

1-Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization’s business activities.

2- Accounting is the science that collects, organize and records relevant, reliable and comparable information about an organization’s business activities.

 1-Note: Accounting assumptions are fundamental principles that underlie the preparation of financial statements. These assumptions provide a framework for how transactions and events should be recorded and reported. Here are the main accounting assumptions: 

1.1-Economic Entity Assumption: Definition: This assumption states that the transactions and activities of a business should be kept separate from those of its owners or other businesses. 

Purpose: To ensure that the financial statements reflect only the financial activities of the business itself and not those of the owners or other entities. Example: Personal expenses of the owner should not be included in the company's financial statements. 

1.2-Going Concern Assumption: Definition: This assumption presumes that a business will continue to operate indefinitely and will not be forced to liquidate or significantly curtail its operations in the foreseeable future. 

Purpose: To justify deferring certain expenses and revenues and to value assets based on their continued use rather than liquidation value. Example: Assets such as equipment and buildings are recorded at historical cost rather than liquidation value, assuming the company will use them for their useful lives. 

1.3-Monetary Unit Assumption: Definition: This assumption states that financial transactions should be recorded in a stable currency, and the currency used should be consistent over time. It also assumes that the monetary unit is stable and does not account for inflation or deflation in financial reporting. Purpose: To provide a consistent measure of financial performance and position, allowing for comparability over time. Example: All financial transactions are recorded in U.S. dollars in a U.S.-based company, even if inflation or currency value changes. 

1.4-Periodicity Assumption: Definition: This assumption states that the life of a business can be divided into distinct time periods (e.g., months, quarters, or years) for reporting purposes. 

Purpose: To provide timely information about a company's financial performance and position by reporting financial results periodically. Example: A company prepares and reports financial statements on a quarterly and annual basis to reflect its financial performance and position during those specific periods. These assumptions are essential for the preparation of financial statements and help ensure that they are useful, consistent, and comparable for decision-making purposes. 

 2-Note:Four key accounting principles you mentioned: 

2.1-Revenue Recognition: Definition: Revenue should be recognized when it is earned and realizable, regardless of when cash is received. This principle ensures that revenue is recorded in the period in which the business fulfills its obligations under a contract, not necessarily when payment is received. Purpose: To provide a clear picture of a company’s financial performance by matching revenue with the period in which the related goods or services are provided. Example: If a company delivers a product to a customer in December but receives payment in January, the revenue should be recognized in December, when the product was delivered. 

2.2-Matching Principle: Definition: Expenses should be matched with the revenues they help generate in the same accounting period. This principle ensures that the costs associated with generating revenue are recorded in the same period as the revenue. 

Purpose: To provide a more accurate representation of a company’s profitability by aligning expenses with the related revenues. Example: If a company incurs advertising expenses in December to boost sales, the expense should be recorded in December, even if the related revenue from those sales is realized in January. 

2.3-Full Disclosure: Definition: All relevant financial information should be disclosed in the financial statements and accompanying notes, which might impact the decisions of users. This includes information about accounting policies, contingent liabilities, and any other material facts. 

Purpose: To ensure that users of financial statements have all the necessary information to make informed decisions. It promotes transparency and helps prevent misleading financial reporting. Example: If a company is involved in a legal dispute that could significantly impact its financial position, it must disclose this potential liability in the notes to the financial statements. 

2.4-Historical Cost: Definition: Assets should be recorded at their original purchase price or cost at the time of acquisition. This cost is used as the basis for subsequent accounting and financial reporting. Purpose: To provide a reliable and objective measure of value based on actual transactions. Historical cost is less subjective than other valuation methods and provides consistency in financial reporting. Example: If a company buys equipment for $50,000, it will record and report the equipment at this cost, even if its market value changes over time. These principles help ensure that financial statements are accurate, reliable, and provide a true and fair view of a company’s financial situation. 

 3-Note: Accounting Constraints. In accounting, constraints refer to the limitations or restrictions that impact how financial information is recorded, reported, and analyzed. These constraints can influence the accuracy, reliability, and comparability of financial statements. Here are some common types of accounting constraints: 

3.1- Materiality: This constraint suggests that financial information should be recorded and reported only if its omission or misstatement would impact the decision-making of users. Essentially, it's about focusing on information that is significant enough to affect economic decisions. 

3.2- Cost-Benefit: This principle asserts that the benefits of providing financial information should outweigh the costs of obtaining and reporting that information. If the cost of collecting and reporting information is too high relative to the benefit it provides to users, it may not be justified. 

3.3- Conservatism: Also known as prudence, this principle requires accountants to exercise caution and choose methods that minimize the overstatement of assets and income or the understatement of liabilities and expenses. The idea is to anticipate no profits but anticipate all losses. 

3.4- Consistency: This constraint requires that once an accounting method is adopted, it should be consistently applied across periods to ensure comparability. Changes in accounting methods should be disclosed and justified to maintain transparency and comparability. 

3.5- Relevance: Financial information must be relevant to the decision-making needs of users. Information is relevant if it has the capacity to make a difference in decisions by helping users to evaluate past, present, or future events or to confirm or correct past evaluations. 

3.6- Reliability: The information presented in financial statements should be accurate and free from significant errors or bias. It should faithfully represent what it purports to represent, ensuring that it is dependable for users. 

3.7- Understandability: Financial information should be presented in a manner that is clear and comprehensible to users who have a reasonable knowledge of business and economic activities. Complexity should be minimized to ensure that the information is accessible. 

3.8- Comparability: This constraint requires that financial statements should be comparable across different periods and with other entities. Consistent application of accounting principles and practices facilitates this comparability. Understanding and applying these constraints helps ensure that financial statements are both useful and credible to their intended users.