Financial Statements
There are various types of financial statements. These statements provide information about the performance and financial position of an organization. They also assist in making crucial financial decisions (Edward, 2012). Income statements show an organization’s expenses, gains, losses and revenues. This includes an outline of all the costs that are associated with earning revenue. Balance sheets are used to show all elements that make up the attributes of accounting. This shows the manipulations that are used to equate assets with liabilities and equity. The cash flow statement is used to indicate the whole amount of cash within an organization. The statement of shareholders’ equity indicates all the changes that occur in the equity account of shareholders (Edward, 2012).
The income statement is a very important statement in communication the financial health status of an organization. This is because this statement indicates the net deficits and surplus in an organization. These statement is prepared through calculating past financial events. This statement provides a detailed account of the past and the present. This can assist an individual to forecast and asses the future performance and ascertain the current stability.
Use your promo and get a custom paper on
"Role of Accounting in Business".
Accountants and Certified Public Accountants
Accountants and certified public accountants are very important people in the corporate world. The individuals keep track of an organization’s finances. They are in charge of financial functions like collection, analysis, recording and presentation of information related to finances. They are also in charge of dispensing duties related to financial planning and reporting. As management consultants, they also give advices and projections of what is supposed to happen in the financial perspectives.
Accounting is a very important aspect for organizations. This is because accounting assists in providing the financial position of an organization. This is a crucial process because it gives the foundation for control, planning and decision making. This is also a very critical part of budgeting. On the other hand accounting can be so tedious especially for big organizations. This is because it may require sophisticated systems and structures in an organization and this may be costly to the organization (Edward, 2012).
Service and Merchandising Company
Both service and merchandising businesses require massive investment in terms of organizational resources. The business structures for both are almost the same. The only difference is that the merchandising businesses have massive input in terms of inventory. My choice for a merchandizing business requires sophisticated control measures and organizational structures that can assist in managing stocking of goods as well as updating the financial statements regularly.
A chart of accounts is very crucial for a business entity. This is because it contains all the business account names and the relevant financial transactions. For a merchandizing company, the chart of accounts has to be intensive and dynamic. Unlike a service company, the charts of accounts for a merchandizing business must contain the merchandizing inventory, the costs of various goods acquired and sold and the sales returns and allowances. The charts of accounts for the service companies is relatively easier and simpler to make because it does not involve inclusion of business inventory. These charts must also include a quantity measure definition.
Automation of Accounting
Automation of the accounting processes for the merchandizing business is very crucial. This is because automation of these processes saves a resources. Some of the resources that are saved includes time and fewer human resources are required because it reduces manual work significantly. The automated systems also enhance efficiency and accuracy in the accounting process (Edward, 2012). Automated systems can be linked with other systems within the organization by coupling with other applications and thus automating the general flow of information.
Internal control procedures provide the guidelines and the principles that dictate how information is handled within an organization. Accounting workflow is very crucial for defining how information flows through the business operations and functions. Fraud prevention assists in prohibiting certain behavior that may lead to theft within the organization (Carey & Knowles, 2011). Verification of accounting data includes reviewing of data to enhance validity and accuracy.
- Carey, M., Knowles, C. (2011). Accounting: A Smart Approach. Oxford. Oxford University.
- Edward, C. (2012). Accounting: An Introduction to Principles and Practice. Stamford. Cengage. /li>
