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accounting lecture review

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Business always requires a number of logical and sequential tasks and one of the most important process is accounting. In the last lecture, Professor Chen introduced us about Accounting, which is an integral system of every organization. By that lecture, I can generally understand the basic steps included in accounting system, procedures as well as the method to evaluate the financial statements of an organization. The first and the most basic concept is accounting. It is an sequential process including collecting business transaction documents, recording in journals, classifying information, summarizing data, reporting, and the last step, analyzing the reports about financial activities of the company. In fact, accounting is necessary to every organization for instance offices, schools, hospitals, supermarkets, government agencies because each organization requires a full-fill reports about finished work to analyze and make the plan for future work. For example, a company which is selling milk and butter have to do the accounting for analyzing the sales, profits and debts of the company, and then give the strategies to increase profit, pay the debt, improve the services and attract more customers to buy their products. Secondly, the accounting system is divided into two categories of tasks which are financial accounting and managerial accounting. 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. There are two main profitability ratios: net profit margin and return on equity. The net profit margin is the ratio of net profit to net sales. Return on equity (ROE) is the ratio of the net profit to total owners' equity. By the comparison among the company's ratio over years, the managers can identify the trends and the remarkable pros and cons. In conclusion, accounting plays an important role in the business organization because it supports top managers to evaluate the statement of the company and to make the decisions. Learning about accounting considerably gives me deeper understanding more about the business world, how the business goes, how they manage the flow of money to decrease loss and increase profit.
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