Accounting (or accountancy) is subject area, which is based on the study of all aspects of financial information and recording of financial transactions. The discipline is called “the language of business” because it is one of the key principles of the existing and functioning of any business. The economy of any organization or company is going to be failed without someone responsible for its accounting.
So the concept of accounting is directly connected with any communication of financial information inside the business area, including processes of identifying, recording, measuring, classifying, verifying, summarizing, analyzing and interpreting this information.
All of the listed above activities are performed by a person (or by entire financial department in large corporations) named accountant or bookkeeper. It is an accountant who is fully responsible for any financial transaction of the company he worked in and his work is not just to record, keep and organize these transactions, but to summarize and analyze it in order to report this information to tax collection entities and oversight agencies.
The process of accounting has the standard framework of guidelines called generally accepted accounting principles (GAAP). Accountants have to know and follow these principles preparing the financial statements.
Modern accounting consists of several large subfields:
- Financial accounting deals with the reporting of company’s financial information to external users. This process includes the preparation of financial statements available for public consumption. So all people, interested in receiving such information (investors, suppliers and regulators) can easily get it.
- Management accounting deals with the processing of the information (both financial and non-financial) required for managers to do their work properly in order to make the right decisions for the company’s development. This subfield of accounting produces future-oriented reports (for example, the organization’s budget on the following year). Cost-benefit analysis is the base for management accounting reports.
- Auditing deals with the process of verification and evaluation of the financial statements of a company. The work of the auditor is to express his independent opinion on the fairness of the organization’s financial statements in accordance with the GAAP.
- Accounting information system (AIS) deals with the processing of financial and accounting data and belongs to the companies’ information system. AIS is predominantly a computer-based method for tracking accounting activity in combination with information technology resources.
- Tax accounting deals with the process of preparation, analysis and presentation of tax payments and tax returns. Each country has its own tax system that requires the use of specialized accounting principles for tax purposes.
Many people follow nowadays this always topical and well-paid profession. But the field of accounting requires a lot of efforts and time to understand its aspects, strict rules and calculations. So don’t worry if you become puzzled with some tasks and remember that a lot of professional essay services are ready to give you all the necessary help to master this discipline.