Accounting Final Common Assessment Paper - Essay Example

? Accounting Accounting Accounting has been one of the oldest professions, which has existed since the inception of trade. However, its forms have changed in terms of the methods deployed for performing different tasks of accounting. Moreover, over decades there has been a constant strive to make most suitable standards and guidelines for the accounting function to adhere to in all forms of organizations. This is also carried out to ensure that the information provided by the accounting function is meaningful and relevant to its users. Every organization does have an accounting function to assist in recording and reporting of financial information generated from different activities of the business. The data processed by the accounting function can be useful to users of this information in many ways. This paper looks at the role of accounting in organizations and its importance in terms of managing a business. Furthermore, it will delve the usefulness of the accounting information generated the accounting function. The importance of accounting function in any organization cannot be ignored. It is considered as an independent function which is responsible for gathering information from different business activities and then compiling and publishing them in accordance to the reporting standards. The role of accounting has changed over the years. It is not just limited to reporting of financial information to external users, but also is responsible for performing various other tasks in any organization. Accountants are involved in planning and implementation of the company’s strategies through different processes. The accounting function provides information to the management of companies to assist them in making the right decisions for their businesses. It, therefore, implies that the role of the accounting function has become diverse in any organization (Bragg, 2002). The accounting profession is governed by different local and international bodies, which are responsible for ensuring that companies record and report financial information in accordance with the accepted policies and standards. Alternative methods have been proposed by accounting governing bodies for recognition and reporting of companies’ assets, liabilities, and equity. For example, inventory of a company can be recognized and recorded using four different methods such as First In First Out (FIFO), Last In Last Out (LIFO), Average Cost, and Output Method. It should be noted that different methods of recording inventory will yield different results in the same year, and companies have the choice of selecting a method and reporting their inventory according to the requirements of reporting standards. However, it should also be highlighted that the choice of different accounting methods should be in accordance to the requirements of accounting standards. In the recent years, several frauds surfaced the US corporate sector, which were blamed on the inherent loopholes and too much flexibility in the US GAAP. Since then, efforts between FASB and IASB are being carried to improve the accounting standards and reconcile methods of recording and reporting different elements of a business. One of the core functions of accounting is to collect data from different business segments and process it into a form of information, which is understandable, relevant, and complete. Each business segment performs different activities and produce data which has to be consolidated by the accounting function of organizations. This information is referred to accounting information that may exist in different forms. Traditionally, this information was only available based on paper based working methods. However, as information technologies have been developed the accounting function has been shifted to computerized systems. These systems allow systematic entry of data and then making this information accessible to accountants who then process this data using various tools to generate financial information. In present times, the accounting information systems used by companies have become very intelligent. Different technologies have been incorporated into such systems that make the entire process of data entry and processing easier and faster. For example, the use of XBRL in accounting systems has transformed the way information is collected, analyzed, and communicated between different segments of businesses. This has allowed automatic methods for collecting of business data from different business segments and compiling them to generate financial information (Gelinas, Dull, & Wheeler, 2010). Different stakeholders of the business including government, tax authorities, debtors, creditors, investors, and shareholders etc. use this financial information. These stakeholders use the financial information for various purposes. Particularly, investors and shareholders rely on the accounting information to make their investment decisions. They tend to invest in those businesses that generate healthy and growing profits. This information is available in the financial statements of a business, which are produced by the accounting function of the business. Therefore, it can be implied that the financial information generated by the accounting function is of the highest value for the business to be able to make efficient and effective strategic decisions. It is therefore imperative for the accounting function to generate information, which is complete and accurate. The accounting function can also play an important role in saving a business from bankruptcy. Accountants working for any organization are viewed as the first ones to foresee potential problems with the business and therefore, can convey the possible solutions to the management in order to avoid financial difficulties and eventually bankruptcy. Up to date financial information generated by the accounting function can assist the management to plan for possible forecasted bankruptcy and take initiative that could improve the company’s financial condition. The accounting function can also play an important role in providing consultancy to the business facing bankruptcy. It could help the business to identify segments, which are contributing to the loss and must either be disposed off or restructured in order to deliver positive results (Newton, 2009). In order to conclude this discussion, it could be stated that the role of accountants in any organization is inevitably important. Over the years, the role of the accounting function has been widened and accountants are now involved not just in reporting tasks, but also in decision making tasks. Moreover, methods used for preparation and communicating financial information both within and external to organizations have changed over the last few decades. However, the emphasis has remained on the accuracy, completeness, reliability, relevance, and timeliness of the financial information generated by the accounting function. Reference List Bragg, S. M. (2002). Accounting Reference Desktop. New York: John Wiley & Sons. Gelinas, J. U., Dull, R. B., & Wheeler, P. R. (2010). Accounting Information Systems. Mason: Cengage Learning. Newton, G. W. (2009). Bankruptcy and Insolvency Accounting, Practice and Procedure. New York: John Wiley & Sons. Read More