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BUSINESS SCHOOL
Bachelor's Degree in Accounting                     and Auditing

Participants:

Martha Isabel Sáez Otero

CIP: 8-740-1437

Ernestina Itzel Cruz  Cardenas

CIP: 8-832-472

Subjet:

English IV

Teacher:

Miguel Fernando Sánchez Pérez

October 13, 2023

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Pursuing a career as an accountant can be one of the best ways to invest in your education. Too often, graduates have celebrated their milestones of completing their associate's, bachelor's, master's and even doctoral degrees without knowing if the degree they have worked so hard to yield a return on their investment.

The reality of earning a postsecondary degree is that there is no guarantee of landing a dream job that offers financial security. However, it has been proven time and time again that these can increase with a college degree.

Accountants have a pretty good idea about how hard-earned dollars contributed contributors.

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Accounting can be referred to as the systematic and comprehensive recording of a financial transaction relating to any business. Also refers to as a process of analyzing, summarizing and reporting these transactions to the tax collection agencies and oversight agencies.

Accounting helps the management to be able to ascertain the financial position of the business. With all accounting activities, the final report provided helps management to know the business position so they can be able to know which direction they are ending.

Accounting is very important and needed for any business transactions. It helps in recording, classifying and finally summarizing the transactions in a business. This enables coming up with a well analyzed financial document like balance sheet, trial balance among others when accounting is done properly within the business transactions.

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The Importance Of Accounting In Our Modern Society

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The Importance Of Accounting In Our Modern Society

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Accounting is a very important term to our modern society. It is the career for men and women who at the start have their eyes set on top positions in industry, management, government, and general business. Accounting is a basic need of every businessman, from the operator of a filling station to the government . It's so important to our society. None of the business organization can operate without is. They are there-somewhere-in every business. In small business, people use pen, ink and skill keep the records. In large business, modern accounting machines are used to operate. Men and women are directing these machines in the accounting process. Wise businessmen enter business must have some accounting knowledge.

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.

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Importance of Accounting in Business Organization

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Importance of Accounting in Business Organization

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Banks and lenders
In order to get any loan from the financial institution, you must be able to present your financial status in acceptable order. So in order to make it, you need to have proper accounting system so as to present various books of records such as profits recorded, assets and liabilities, taxes paid among others. Financial institutions will scrutinize them carefully before landing to a decision of awarding loan.

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learning How a Company Finances Their Operations

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learning How a Company Finances Their Operations

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Another question that business accounting helps answer relates to the mix of debt and equity used to finance a company's operations. The ability to identify debt and equity is crucial in determining the company's value since the debt-to-equity ratio is commonly used in measuring a company's idiosyncratic risk. Although most information on debt and equity comes from the balance sheet, certain debt items require further digging and deep knowledge of business accounting.

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Advantages of Accounting

Maintenance of business records

Preparation of financial statements

Comparison of results

Decision making

Evidence in legal matters

Provides information to related parties

Helps in taxation matters

Valuation of business

Replacement of memory

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Some of the advantages of accounting are Maintenance of business records, Preparation of financial statements, Comparison of results, Decision making, Evidence in legal matters, Provides information to related parties. Let us discuss the advantages and disadvantages of accounting in greater detail.

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Advantages and Disadvantages of Accounting

Stakeholders of an entity want to know whether the entity is earning a profit or incurring losses. They also wish to know whether the capital investment in the business is increasing or decreasing during the accounting period.

Accounting is a mixture of art and science. Accounting is an art of recording, classifying and summarizing financial transactions in a significant manner and in terms of money.

Advantages of Accounting

Maintenance of business records

Preparation of financial statements

Comparison of results

Decision making

Evidence in legal matters

Provides information to related parties

Helps in taxation matters

Valuation of business

Replacement of memory

Browse more Topics under Theoretical Framework Of Accounting

Maintenance of business records

It records all the financial transaction pertaining to the respective year systematically in the books of accounts. It is not possible for management to remember each and every transaction for a long time due to their size and complexities.

Preparation of financial statements

Financial statements like Trading and profit and loss account, Balance Sheet can be prepared easily if there is a proper recording of transactions. Proper recording of all the financial transactions is very important for the preparation of financial statements of the entity.

It facilitates the comparison of the financial results of one year with another year easily. Also, the management can analyze the systematic recording of all the financial transactions according to the policies of the entity.

Decision making becomes easier for management if there is a proper recording of financial transactions. Accounting information enables management to plan its future activities, make budgets and coordination of various activities in various departments.

The proper and systematic records of the financial transactions act as evidence in the court of law.

Provides information to related parties

It makes the financial information of the organization available to stakeholders like owners, creditors, employees, customers, government etc. easily.

Helps in taxation matters

Various tax authorities like income tax, indirect taxes depends on the accounts maintained by the management for settlement of taxation matters.

For proper valuation of an entity's business accounting information can be utilized. Thus, it helps in measuring the value of the entity by using the accounting information in the case of sale of the entity.

Proper recording of accounting transactions replaces the need to remember transactions.

Disadvantages of Accounting

Expresses Accounting information in terms of money

Accounting information is based on estimates

Accounting information may be biased

Recording of Fixed assets at the original cost

Manipulation of Accounts

Money as a measurement unit changes in value

Expresses Accounting information in terms of money

Non-financial transactions cannot be given effect to in books of accounts. Only transactions of financial nature are measurable by the accountant. In fact, financial transactions are expressed in terms of money.

Accounting information is based on estimates

There are some accounting data which are based on estimates. Thus, inaccuracy in estimates is possible.

Accounting information may be biased

Accountants personal influence affects the accounting information of the entity. Different methods of inventory valuation, depreciation methods, treatment of revenue and capital expenses etc can be adopted by the accountant for measurement of income of the entity.

Hence, the income arrived in certain cases might be incorrect due to the lack of objectivity.

Recording of Fixed assets at the original cost

There can be a difference between the original cost and current replacement cost of a fixed asset due to efflux of time, change in technology etc. Thus, the balance sheet may not show the true financial status of an entity.

Manipulation of Accounts

The accountant or management can manipulate or misrepresent the profits of an entity.

Money as a measurement unit changes in value

Stability in the value of money is not possible. Accounting information will not show the true financial position if changes in the price level are not considered.
Question: What are the functions of accounting?
Ans: The functions of Accounting are:

1. Keeping systematic records

2. Protecting and properly controlling properties of the business

3. Ascertainment of profit or loss

4. Ascertainment of the financial position of the business

5. Facilitating decision making

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Advantages and Disadvantages of Accounting: Videos, Examples

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Maintenance of business records, Preparation of financial statements, Comparison of results, Decision making, Evidence in legal matters, Provides information to related parties are some advantages of accounting. Let us discuss the advantages and disadvantages of accounting.