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Fundamental accounting concepts
Fundamental accounting concepts
Fundamental accounting concepts
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Abstract A largely accepted language is required for a business or organization to effectively communicate its results and position to stakeholders, which is why accounting has come to be known as the "language of business". Accounting is really the means for providing financial information to others. Financial analyst then take the data the accountants have compiled in the form of reports, and make educated guesses at what their company should do next. David ballast (1996) stated, "The fact remains that accounting and finance are the primary tools for reducing business problems and opportunities to a common denominator, setting goals, measuring results, and making decisions." (p. 1) Accounting & Finance Distinguishing between Accounting & Finance Both accounting and finance deal with money and assets; however, they are categorically different concepts. This portion of the essay will discuss the dissimilarities between accounting and finance. Examples of different concepts will be given for both practices. Accounting as a discipline is more of a law, whereas finance is more of a theoretical practice. Accounting has clearly defined guidelines, rules and regulations. As defined by Wikipedia (2005), "accounting is the measurement, disclosure or provision of assurance about information that helps managers and other decision makers make resource allocation decisions". Two key disciplines in accounting are financial accounting and auditing. Financial accounting involves processes by which financial information about a business is recorded, classified, summarized, interpreted, and communicated (Wikipedia, 2005). Auditing is a related to financial accounting, but it is a separate discipline. "Auditing is the process... ... middle of paper ... ...ng Paper. Marshall, D., McManus, W., & Viele, D. (2004). Accounting: What the numbers mean. [University of Phoenix Custom Edition e-text]. New York, NY: McGraw-Hill Companies. Retrieved December 30, 2005 from University of Phoenix rEsource, MBA 503 web site. The American Heritage Dictionary. (2004). "finance." The American Heritage® Dictionary of the English Language, Fourth Edition. Houghton Mifflin Company, 2004. Retrieved December 20, 2005 from Answers.com. http://www.answers.com/topic/finance Tutor2u. Introduction to accounting. Retrieved January 7, 2006 at: http://www.tutor2u.net Wikipedia. (2005). Accountancy. Wikipedia the Free Encyclopedia. Retrieved December 20, 2005 at: http://en.wikipedia.org/wiki/Accounting Wikipedia 2. (2005). Finance. Wikipedia the Free Encyclopedia. Retrieved December 20, 2005 at: http://en.wikipedia.org/wiki/Finance
Accounting is “a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information” (Accounting, n.d.). Financial information mentioned above includes any financial transactions done by the business. There are two types of accounting. The first one is accrual accounting, which realizes transactions at the time they occur and disregards whether or not cash transaction has occurred. This method is widely used in business, because it allows transactions to be completed over time and distance. Financial statements produced by accrual accounting reflect a sophisticated trade and a much more accurate snapshot of the business’ current situation. The opposite of accrual accounting is cash accounting, in which transactions are realized only when cash payment is made or received. This is the method used in personal finance.
Marshall, D.H., McManus, W.W. & Viele, D.F. (2011). Accounting: What the numbers mean (10 ed). New York, NY: The McGraw-Hill Companies, Inc.
Financial accounting focuses on providing financial statements to stockholders and internal and external users. Financial statements created under managerial accounting provide instructions and data used for internal business management purposes in effort to compute cost of product. Financial accounting provides data for the sole purpose of preparing companies financial statements. Unlike financial accounting, managerial accounting uses past records to forecast future budgets; additionally it doesn’t adhere to any set financial accounting standards such as US GAAP or IFRS (Averkamp). Financial accounting creates financial income statements, balance sheets and cash flow statements under the guidelines of US GAAP or IFRS; however managerial accounting prepares in-depth management products to include cost volume profit analysis, profit planning, operational budgeting, capital budgeting to name a few
It was my pleasure to be given the opportunity to attend the International Conference of Critical Accounting at Hunter College. At the conference, there were many professional international accountants, brilliant college and university professors, and many others who are expertise in the accounting field. All of these accountant professionals shared their experiences in the field, and their researches and findings. However, there was a unique session of this conference, a brief memorial of Abraham J. Briloff. He was an intelligent accountant and was a mentor for many in his field. Therefore, I would like to dedicate this assignment in memory of Briloff and his influences in the accounting field.
Marshall, M.H., McManus, W.W., Viele, V.F. (2003). Accounting: What the Numbers Mean. 6th ed. New York: McGraw-Hill Companies.
Financial Accounting is ‘Asset valuation, accounting record completeness and accuracy, accounting estimates, reporting transparency, fair value accounting issues, convergence of accounting standards, evolution of accounting standards, audit efficiency and effectiveness’, as suggested by Accounting Dictionary (2014).
Gibson, C. H. (2011). Financial reporting & analysis: Using financial accounting information. (12th ed.). Mason, OH: South-Western Cengage Learning.
Accounting is the language of business. Accounting records and processes financial information into an accessible format that can be understood by anybody in the business world. It is defined in business that accounting is “the recording, measurement, and interpretation of financial information.” (Ferrell, Hirt, Ferrell, 2016, p. 286). Companies uses accounting tools to evaluate organizational operations. Accountants summarize the information from a firm’s business transactions in various financial statements for a variety of stockholders. There is a lot of business failures that happen because of information that is “hidden” in the financial statements. Cash flow is the greatest concern of management. For businesses to succeed, they need
DOI: www.textbookequity.com Siegel Ph.D. CPA, Joel G.; Shim Ph.D., Jae K. (2010-02-01). Dictionary of Accounting Terms (Barron's Dictionary of Accounting Terms) (p. 129). Barron's Educational Series - "The. Kindle Edition.
References Financial Accounting Standards Board. 2006, July 6 -. Conceptual Framework for Financial Reporting. Financial Accounting Series, 1-55. Wolk, H., Dodd, J., & Tearney, M. (2003).
Accounting is the pillar of every company to measure its growth, loss, revenue , capital, its really specify the real terms in foam of figures and sometimes in tables, in accounting there are certain rules are obtained to make more accuracy while playing with figures.
Accounting dates back as far as first centuries, is the language of business. As everything has gone through many changes, accounting has also changed many times through out the centuries. It went from the use of abacus to the most advanced softwares, and computers. With these drastic improvements nowadays accounting, financial accounting and management are facing big challenges. From the presentation of the reports to communication to the users, investors, and owners, the accounting field has gained totally a new shape from two decades ago. Today with the dynamic change in every aspect of life, the accounting field has to act fast and be able to adapt these new changes and challenges in order to survive.
The revenue/cost period-: Revenue and the cost period in accounting that the company get income from normal business activities. It’s referred to normal business income that the company got by selling their product and service.
Accounting is so important in our modern society. It serves a variety range of place in our society. It serves a variety range of place in our soceity, from school to hospital, from business firm to government agencies. It's also the main force in regulation of taxation and industrial activity. It serves a great aspects on the development of mass-production systems, any way, it's a very important term in our modern soceity.
Accounting itself is a system that people has been using for thousands of years, the system records financial information about a person or business, businesses use it in order to be able to keep and track their financial accounts and other financial information in a safe and efficient way. (Brooks, 2012)