Handling and managing money is very important to a business as well as to your
own budget. Keeping track of your expenses and being financially literate is very
needed. Accounting can be a big help and keeps your transaction kept.
Accounting is not just adding and subtracting numbers, it is referred to as the
“language of business” which has a reason for it. Accounting is a systematic way
of recording, interpreting and even classifying financial transactions of an
individual, company or even a country. It is a very vital tool since it can show
transparency and can help in making financial decisions. But not only businesses
or corporations need accounting as well as the government which can help in
one’s economic growth and requires trust as well as reliability since accounting
practices cannot be overstated or tampered. Resulting impact to social and even
economic systems. Accounting is basically anywhere, without it keeping money
or transactions wouldn’t be possible. There may be negative impacts that can
cause money loss, debts and downfall of a business or a corporation.
Normally, when people hear accounting, what comes to their minds is
businesses. Since it is knows that accounting provides a structured framework
for keeping one’s financial activities. Every transaction is documented and
categorized. The most common terms in accounting are assets, liabilities and
equity. These are the needed things and as well as the foundation of a balance
sheet or an income sheet. These financial statements are important not just by
having the whole transactions recorded, organized but it can also show a brief
snapshot of the business or even the company’s financial standing given by a
point of time. It can show the relationship between the liabilities and the assets,
the overview of how money is coming in and out.The other statements can also
show expenses, revenues, the cash flow which is very crucial also. By
accounting, you can check how your money comes in or comes out, the
expenses you had, the revenue and such. Accounting undergoes a cycle, it
begins with recording every transaction or any event that concerns money from
your business or involves it. After it will be analyzed and will be posted to journal
entries to the ledger, it has the date and time of the transaction and of course the
amount. Then all business accounts will be listed and balances will be figured
out. Preparing and adjusting entries is next and followed by the trial balance.
After this, a financial statement will be prepared and it includes summarizing
every financial information into accurate reports for easier view and access for
those who need it and for file keeping as well for later use. These statements are
important for every different purposes. And then, it goes back to the start which is
recording every transaction.
There are different areas of accounting. Financial, Managerial, Auditing and Tax
Accounting. Each area has its own role and exact field to focus on. For financial
accounting, this is essential to companies. By the use of accounting, financial
statements will be generated by you and people outside like the investors,
government agencies and possible buyers can use this as well as learn about
your business’ standing. Managerial on the other hand is the same with the
mentioned above but with its own exceptions. First, statements made are for
internal use and second is they are made quarterly or sometimes monthly unlike
financial which is annually. Tax accounting is another type of accounting where it
makes sure you don’t pay more income tax than what you are technically
required to. Cost accounting involves analyzing costs in regards to producing
products or even services.
Accounting also helps businesses, corporations or companies maintain
compliance with regulations. Just like here in the Philippines. Businesses are
often required to submit their financial statements annually to authorities. By
doing this, they can ensure a business is paying their taxes and they won’t be
having any penalties or legal issues.
Now with technology, there are softwares designed also in line with accounting. It
can make accounting a little easier and advance. It went transformation with its
integration to technology. During the old times, manual book keeping is done but
today, there are different softwares that revolutionized accounting processes and
analyze datas. Automated accounting softwares allows accurate reportings, real
time data and also analysis. It made accounting accessible as well anytime and
anywhere which can make collaboration between accountants and clients more
easy. Due to technology, it offers advantages to accounting. From efficiency,
security and even can save costs since it reduces manual labor and minimizes
errors. It made it more dynamic, time efficient and as well as the profession.
In regards to the economy and society, accounting has a crucial role here as well.
It provides detailed information for resources to be allocated efficiently. It helps
the government in managing budgets, taxation and for public spending.
Accounting ensures fair taxation to individuals to corporations. It helps with fair
distribution, justice by providing data that authorities can use to show unfairness
and inequalities. Accounting bridges a lot of things, from economic theories to
real life financial practices. Help the economy by governing resources effectively
for equal treatment to their people.
Accounting can be applied in personal affairs too, from budgeting, tracking
expenses, saving and investing. It can help in managing debts as well as well as
having major purchases like buying property and such. Being financially literate
can be a good thing to manage one’s money.
In essence, accounting is essential. From managing businesses to managing
and making personal finances to meet financial goals. Because of accounting, a
business can see if they’re making profits, which part of the business is making
money.
It aims to have everything on track while earning and responsible. By using
accounting, it will be recorded and organized. Accounting is fundamental to
managing, understanding, and improving financial works. Whether for individuals,
businesses and even the governments. Accounting provides the data needed to
make informed decisions and plan for a stable financial future. It creates and
shows balance.
