Importance Of Accounting

INTRODUCTION The purpose of this document is to describe the nature, purpose and scope of accounting and it deliberately explains the details of each category in accounting. Accounting involves in preparing financial documents of an entity by analyzing, verifying, and reporting this records. It emphasizes its major characteristic role in field of banking and finance, with a mixture of supportive sub topics. Purpose and Scope Main view of this report is to explain how the accounting plays a major role in banking, finance and other sectors of business. To decide this, the following questions are explained as follows: • What is accounting?

The information the statements provide offers benchmarks and feedback that help the company make minor adjustments and also determine its overall direction. Financial statements are useful for making decisions regarding expansion and financing. They also figure into marketing decisions, giving data specifying which aspects of company operations provide the best return on investment. (Gartenstein, 2015) The accounting cycle is a common practice in financial accounting that allows an organization to record and calculate its financial activities. The cycle consists of a number of steps, each of which depends on earlier steps to collect data and organize it in a meaningful way.

As a result, they can make proper portion of credits among different borrowers. Financial state¬ment analysis helps in determining credit risk, and to decide the terms and conditions of a loan, interest rate, maturity date etc. 5. Assessment of the operational efficiency Financial statement analysis helps to assess to operate the company’s efficiency in managing a company. The current performance of the firm which are revealed in the financial statements can be compared with some standards set earlier and the aberration could be between quality and actual performance can be used as a hint of efficiency of the management.

Balance sheet, Income statement, statement of cash flows, and statement of stockholders’ equity The balance sheet is one of the major financial statements used by accountants and business owners. The balance sheet displays an organization's fiscal position at the finish of a specified date. Some depict the asset report as a "preview" of the organization's budgetary position at a focus a minute or a moment in time. The income statement is imperative since it demonstrates the benefit of an organization throughout the time interim specified. The period of time that the statement spreads is picked by the business and will differ.

Financial statements Financial statements (or financial reports) are formal records of a business' financial activities. Financial statements provide an overview of a business' financial condition in both short and long term. All the relevant financial information of a business enterprise presented in a structured manner and in a form easy to understand, is called the financial statements. A sound understanding of financial statements helps us to: • Identify damaging tendencies and tendencies throughout organization’s functions (for case in point, the actual unhealthy backlog associated with inventory or reports receivable) prior to circumstance turns into vital. • Monitor profit requirements using a well-timed groundwork, and identify funding desires early.

Accounting is the compilation of financial information for use in making economic decisions. BOOKKEEPING provides the basic accounting data, by systematically recording such day-to-day financial information as revenue from the sale of products or services; expenses of business operations such as the cost of merchandise sold; and overhead expenses such as rent, wages, and so forth. Accounting principles determine which financial events and transactions should be recorded in the bookkeeper's ledgers, journals, and computer printouts. The analysis and interpretation of these records is the primary function of accounting. The various financial statements produced by accountants then furnish business and other types of organizations with the basis for their financial planning and control, and provide other interested parties (investors, the government) with information they can use to make decisions about these organizations.

One’s lively hood depends on decisions made in the business world. Business transactions are done daily and can impact one’s economic stability. Trust is placed in the hands of corporate America and an obligation of financial reporting to reveal a complete honest and legal picture of an entity’s accounting practices is important in attaining trust. This paper will discuss the obligations of legal and ethical standards of practice in the financial spectrum. 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).

Introduction The purpose is to explain the similarities and differences between financial and managerial accounting. Provide examples of managerial accounting reports that she could see within EEC. This paper will explain both financial and managerial representing Eddison Electronic Company (EEC). They will both have the same usage which is to get ready and examine money related information related to the organization. The motivation behind both of these bookkeeping routines is to furnish the clients with enough data to settle on sound investment choices in regards to the organization.

Accountants have been a necessary tool in all organizations such as individual companies, partnerships, schools and governments. Indeed, they have great professional technique in a rule of accountancy that government are able to measure and report financial information as organizations. This can also provide a lot of positive impacts in the running of a business. Research shows there are three main ways accountants can keep business costs down which involve internal and external actions. For internal control, the accountant has a responsibility to monitor finances of a company.

1. a) Accounting concept refers to the basic assumptions and rules and principles which work as the basis of recording of business transactions and preparing accounts. Accounting Concepts Business entity Money Measurement/stable monetary unit Going Concern Historical Cost Prudence/conservatism Materiality Objectivity Consistency Accruals/matching Realization Uniformity b) The main objective is to maintain uniformity and consistency in accounting records. These concepts constitute the very basis of accounting. All the concepts have been developed over the years from experience: Business entity concept, Money measurement concept, Going concern concept, Accounting period concept, Accounting cost concept, Duality aspect concept, Realisation concept,