Accounting and bookkeeping are intertwined and provides financial information to users so that they can make good decision. Throughout this essay we are going to see how accounting and bookkeeping play a significant role in personal finance management and how financial software are important for financial decision making.
Keywords: Accounting, bookkeeping, information, decision making, finance management.
Accounting is information sciences used to collect, classify, and manipulate financial data for organizations and individuals. Accounting shows the financial health (Liabilities), the profitability (Income statement) and the equity (owner’s equity) of an organization or an individual. Without information no good decision can be made. Accounting
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Accounting helps me to be aware of my income sources in order to know my assets; it also helps me to be more disciplined by providing a good snapshot on how and on what I expense my money so that I can acknowledge my unnecessary expenses and I how take corrective actions. Without good financial information we can more likely create improper budgets and set goals that are not SMART (specific, measurable, achievable, realistic and timely). Knowing and adhering to the accounting principles permits me to be more honest in my financial affairs. For instance, when applying for a bank loan in order to raise money to fund my project or reporting my annual income to the government for tax requirements I will not give false information to deceive the lender or the government because of my ethical attitudes and behaviors. As we have already seen the definition of accounting, Bookkeeping is the process of recording and classifying business financial transactions (activities). So, bookkeeping records the transactions during a specific period and present these financial information into a …show more content…
Balance sheet: the balance sheet provides information about the financial health of an organization or individual i.e. how much the company or the individual own and how much the company or the individual owe. So, the information on the balance sheet will enable me to accurately aware of my current financial position within a stated period of time.
Statement of cash flow: The statement of cash flow provides clear information about the liquidity of a company or an individual. So, having the statement of cash flow at my disposal I will be able to know how much cash I have at hand for my daily activities such as expenses.So, We can perfectly see that the three products of accounting and bookkeeping which are income statement, balance sheet and statement of cash flow are play a crucial role in my personal finance management
According to Vangie Beal, “financial software is computer software designed to help individuals manage their finances and other accounting needs. There are two types of financial software: money management software and tax software. Money management software is purposed
The company I have chosen to research for my final paper is Home Depot. Home Depot’s principal assets, debt and stock information as of January 30, 2001 are as follows: (amounts in millions, except stock)
An important part of financial planning for corporations is the annual report. Publically held companies are required to submit an annual report to the SEC and private companies, even though not required, can use an annual report to gauge the performance of the company for the past year and use the report to plan for the future. The financial statements that make up an annual report are the income statement, the balance sheet, and the statement of cash flows. (Melicher, 2014) Once all of the financial information has been compiled and the three statements that make up the annual report have been completed a corporation can then start to analyze the data. There are several different categories of financial ratios
The next Financial report that was helpful For me to gather financial information in Forecast The financial Stability of the company Was the Balance sheet. FinallyThe sales sheet For the products shows how much Product was purchased As well as how much product we have actually sold. This allows me to know at one time, a large amount of prop what what time the large amount of product needs to be stored and when there should be a short period of product In the facility.
A cash flow statement is another tool that can help with financial decisions. Cash flows that are not regular can put on the statement, on certain months when they occur. This allows one to see the impact of cash flow timing more transparently. The cash flow budget makes risk
This report analyzes the outlook of accounting for the next five years and it will be used to determine if accounting is the right career path for me.
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.
One of the most debatable topics in the accounting industry today is the extent in which we should make the financial statements understandable to the general population. The FASB currently gears its reporting standards toward...
The three most useful products of accounting and bookkeeping are the income statement, cash flow
The Purpose of Financial Statements The financial statements of a business are used to provide information about the status of the business, set performance targets and impose restrictions on the managers of the firm as well as provide an easier method for financial planning. The financial statements consist of the Profit and Loss Account, Balance Sheet and the Cash Flow Statement. There are four areas of information, which we can collect from a company's financial statements. They are: Ÿ Profitability - This information comes from the Profit and Loss account. Were we can compare this year's profit with the previous years.
The recording of accounting history allows for research of a high calibre and quality to be developed. If developments and research of the past were not recorded
(i) Judgement and materiality play a significant role in helping to ensure that the selection of accounting policies in presenting the financial statements for a true and fair picture of the company’s financials. This means that entities should provide the financial statements with comparability, consistency and clarity to users of these statements. Entities must follow accounting policies required by IFRS and AASB should be relevant to particular circumstance.
These accounting information are so much important for the business owner or financial statements reader to analyze the company and make the economics decision.
Accounting is a vital element of business. It records the way a business has grown and, after analyzing figures, suggests the way it should go in the future. Furtunes are gambled on the advice of accountants.
Balance sheets are very important for parties like suppliers, investors, competitors, customers, etc. to know the company’s position, company’s strength and company’s weaknesses. Balance sheets helps to ascertain the amount of capital employed in the business so that we can further calculate different types of ratios. Some important objectives of preparing balance sheets are:
Financial statements provide an overview of a business' financial condition in both short and long term. They help in understanding the past performance of the company and making future predictions about the company. It thus helps us to look beyond the profit figures.