An introduction to accounting Essay Example | Topics and Well Written Essays - 750 words

An introduction to account - strive Example accountancy may not be popular but it is a must for both organisation,be it in the manufacturing or service sector, whatever its size,whichever country it is based in and whether or not its adopt is to maximise profits.Without accounting re germs elicitnot be managed effectivelyIt is irrefutable that any business organization requires the manipulation of accounting. In fact, the use of accounting dates back from the time a business organization is formed. A company cannot function expeditiously without the use of a system which list down the pecuniary legal proceeding that it undertakes (Atrill and McClaney 2001). In the simplest sense, accounting can be defined as the system which provides information about the financial situation of an organization.Since accounting is all told about place downing financial transactions, it is then a necessity for any organization which deals with money (Atrill and McClaney 2001). And looking at at the global business situation right now, no business entity is ever existent without financial resources. Accounting provides a systematic and comprehensive way of reputationing a companys financial transactions. For one, the accounting comparability serves as the basis of the companys financial statements recognizing the principle of double-entry bookkeeping in accounting. The accounting equation is as follows assets less(prenominal) liabilities = shareholders equity. It can also be expanded as assets less liabilities = shareholders equity (revenue less expenses)(Keown et al 2005). ... Accounting aids a business organization to gather three types of information namely operating, financial, and managerial (Atrill and McClaney 2002). all companies are require to use accounting for operating purposes or for daily activities in order to record and determine the amount of salary owed to workers, track sales, and level of inventory. Secondly, financial information is also needed i n order to attract shareholders and creditors. The company often needs to prove to these providers of financial aid that it is worthy of receiving resources. Thus, a company should record transactions and report them to these elicit entities. Lastly, accounting is used for decision making. Companies are interested to know how much inventory should be produced in a given month, whether to manufacture in-house or source from a supplier, whether to acquire a new equipment or not. It should be noted that the purposes and information provided by accounting is used by any business organization whether from the goods or service sector. As long as there is money involved, transactions are irrefutably recorded. The financial resources are tracked through accounting. For one, the most ordinary goal of a company which is to make money can only be evaluated if financial transactions are constantly monitored and recorded systematically. A business can only know whether it makes money or not wh en it employs a system which tracks its revenue and its expenses. However, it should also be stressed that accounting is also required even for not-for-profit business organizations. Non-government organizations like Red Cross and Youth for Christ employ accounting to record their expenses and budget