For internal control, the accountant has a responsibility to monitor finances of a company. Other responsibilities include keeping track of liabilities, duties and taxes. Furthermore, analyses of measurement data on creditors or stockholders are also provided by an accountant. This essay will seek to prove that through principles of financial accounting, cost accounting and cost management, accountants can control the cost of business rather than change demands of customers. In research, there are three main form of management accounting to control the cost in an organization effectively and efficiently.
The flow of accounting is firstly, collecting, classifying, summarizing, analyzing data. After that, financial accounting prepares the financial reports. Finally, these financial reports are used to evaluate the financial situation of the company and the top manager will give the decision about operating the firm. More concretely, financial accounting means doing external financial repor... ... middle of paper ... ... calculation. Moreover, profitability ratios can evaluate the quality of using resources to gain profit and whether management is efficient and effective.
Financial Accounting Accounting systems is very important tool for any type business such as corporation, Partnership, and Sole proprietorship. Accounting systems is also referred to as Accounting Information system. Accounting Information systems is process of collecting and processing transaction data and communicating with decision makers. Every business should have Accounting Information system because it helps us answer questions such as should we expend our company overseas? Do we have enough payroll for our employees?
QUESTION 1 Financial Accounting is an accounting system that tries to meet the needs of the various user groups especially for external users. It’s overall purpose is to construct financial reports that provide information about a firm's performance to external parties such as investors, creditors, and tax authorities. Types of financial reports used are Statement of Financial Position, Statement of income and Statement of cash flow. Users of the information are stockholders, government, investors and tax authorities. Management Accounting is an accounting system is used for internal decision making.
According to Marshall, McManus and Viele (2004), accounting is “the process of identification, measurement, communication of information about a business for the purpose of making decisions and informed judgment” (p.3). Decision makers look at balance sheets, income statements, changes in the owner’s equity and cash flow statement as documentation of the viability of an entity. Misrepresentation of the financial statements can place doubt of profitability in any company. The need for accountability and regulation of accounting practices is important in preserving trust in the business community. Entities have ethical and legal obligations in financial reporting.
The data gathered from the economic events are then translated into financial statements and communicated to internal and external users interested in the economic health of the company. Accounting is a very broad field with endless opportunities in the business world. However, accounting is divided into three major fields, which are public accounting, private accounting, and not-for-profit accounting. In public accounting expert services are provided by certified public accountant (CPA) to the public the same way a lawyer serves clients. Auditing plays a major role in public accounting; they examine the reliability of financial statements of entities and express an educated opinion.
The cash flow st... ... middle of paper ... ...elling shares, and help managers in determining whether a company should stay open based on it’s profits and losses. Executives can also use the data in financial statements to motivate employees if the company is doing well. Externally, creditors can use the information in financial reports to increase or decrease a company’s line of credit, and financial institutions can use these statements to determine whether a company is eligible to apply for a business loan. Overall, financial statements are powerful informational tools that cater to a variety of people and organizations both within the organization as well as on the outside. They are relevant to all organizations when it comes to assessing a business’ past, present and future.
Managerial accounting is the process of compiling financial statements that will aid the management team in making decisions for the organization. The decision-making process requires information that is specific to the question at hand. The issue that is posed is will the information be evaluated adequately omitting information that the government feels is necessary to thoroughly evaluate a business.
This auditing will be conducted by auditing department of the organization, even may be done by an independent auditor who is not part of the organization, and sometimes public officials are elected. In case of unmatched consequences the organization need to give explanation on the misrepresentation of wrong statements. Auditors purpose is then to ensure that the misrepresentations are corrected, then maintain accurate, reliable financial documents and statements. CONCLUSION According to business, or any organization, Accounting plays a major role in developing and growth of the business. Financial standards of the organization expected as the complexities of business growth and expansion.
Other responsibilities include budgeting, cost management, and asset management. These accountants analyze and interpret the financial information corporate executives use to make sound business decisions. Internal auditors are very important to our system. When companies make information more timely, top management base their decisions on actual data, rather than their personal opinion. So these auditors verify the accuracy of their organization’s records and check for mismanagement, waste or fraud.