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The Importance of Accounting - Essay Example

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Summary
The prevailing economic circumstances dictate that accounting is extremely significant. Accounting is a structure which creates, sustains and audits the financial records of an institution. It is a system that evaluates the financial situation of a commercial organization by analyzing the sales, expenses of and expenditures of overheads. …
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The Importance of Accounting

Download file to see previous pages... The maintenance of these commercial documentations is in a sequential order and their summary is done using a predetermined format. Moreover, there exists interior control in keeping of these documents in terms of tests and balances.
There are numerous significances of accounting, which must be accompanied by knowledge on how to perform this activity appropriately. Accounting is also crucial since it assists in ensuring financial accountability in a commercial institution. However, there are individuals that have a different ideology that diminishes the significance of accounting. These individuals sustain the notion that accounting is not as significant as most scholars might insist. The advocates of this notion present different rationales for their argument. Amongst other assertions, there is a claim that conventional record keeping styles are outdated due to technological developments. Therefore, the advocates of this notion conclude that accounting is an extremely complex procedure that wastes an organization’s resources.
The main controversy surrounding on the issues of significance of accounting is about the methodology to utilize for thorough accountability. Most individuals are advocates of the GAAP structure, but there are trends that lead to questioning of whether this technique is all inclusive.
This discourse is an analysis of opposing ideologies about appropriate accounting. It also illuminates on the factors that make accounting significant, with a keen consideration of the opposing ideologies of the topic (Atkinson, Kaplan, Mae and Young, 2011). Introduction The preliminary purpose of accounting is to document transactions in a commercial institution. This comprises documentation of the received and outgoing funds. This procedure has to be undertaken accurately and in adherence to the GAAP regulations. However, some individuals are abandoning the commonplace financial statements. These individuals assert that there are other techniques of analyzing data, even in massive magnitudes. These novel techniques of data evaluation diminish the significance of standard financial accounts. Moreover, these ideologies are due to augmenting disparity between users’ desires and what the standard records avail. Furthermore, there are assertions that the procedure of accounting is intricate especially for minute organizations; and hence, insignificant. This discourse is an evaluation of varying ideologies on the significance of accounting. It also explores why standardized accounting is extremely crucial to an organization despite the trends to this regard. The utilization of the GAAP structure in financial recording is the preliminary aspect of forecasting, controlling and financial deliberation. Most commercial institutions have an accounts section that utilizes GAAPs to give details relating to the prevailing and future financial circumstances of the institution. Consequently, the deliberation procedures regarding the institution’s projects become effortless. The institutions which utilize appropriate accounting practices are extremely competitive when contrasted with other organizations that utilize substandard practices. Moreover, proper accounting assists in determining the opportunities that an organization should seize in accordance to its financial situation (Kieso, Weygandt and Warfield, 2011). Moreover, the advocates of GAAP structure continue to assert that accounting is significant since through this recording, there is easy detection of corruption. This documentation also aids in acquisition of funds from commercial organizations. The banks and other commercial corporations, utilize the ...Download file to see next pagesRead More
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