Based on what you know about accounting, what role do you see it playi

QUESTION

Based on what you know about accounting, what role do you see it playing in business operations? How dependant do you think a business is on its accounting department? Why

Accounting is a system of recording and summarizing business transactions and analyzing and presenting the reports of those transactions. It is classified in two branches: Financial accounting and managerial accounting. Its basic purpose is to provide information to the users which could be internal (like managers, in case of managerial accounting) or external (like creditors and tax authority, in case of financial accounting) to the organization. For every decision to be taken, a proper analysis is done with regard to the companys position, availability of resources and future prospects. Accounting supports decision making by providing both quantitative and qualitative information; and after the implementation of the decision, it also records and summarizes all the transactions. Managerial accounting is especially useful in decision making as various reports are provided to the managers to base their decisions on. Financial accounting is more concerned with preparing annual¦

financial statements viz. balance sheet, income statement and cash flow statement. It gives the users an overview of the business operations throughout the reporting period. Accountants not only prepare the financial statements but also analyze them and give a detailed report to the users. Accounting information also helps in controlling the performance of the organization. Reports of different functions and operations are prepared on a regular basis clearly depicting the actual performance which can be compared with the standards. Any deviations can be found out and corrective measures can be taken. Thus the management ensures the best of quality in performance.

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