financial department
Users and Uses of Financial Information
In every financial accounting textbook, the authors explain in detail about “Users and Uses of Financial Accounting.” Information such as cash flow statements, income statements, and balance sheets are important documents that are kept to ensure that the company is recording everything correctly. The users of this accounting information are divided into two categories, internal and external users.
The internal users of accounting information are the managers who organize, operate and plan daily business routine. They are directly affiliated with the company and use managerial accounting, which includes in-depth reports used to determine financial strengths and weaknesses. For example, internal users would include management, finance, marketing, and human resources. An example of a human resource manager would be that he or she has to ensure the rights of their employees by using wage information along with other data. Important questions arise with internal users. A question for a marketing manager would include, “What price for an Apple I Pad will maximize the company’s net income?”
External users are groups of individuals that are outside organizations, and they use accounting to make financial decisions. An example of an external user would include a creditor, who uses accounting to evaluate the risks of granting credit. Taxing authorities, investors, and customers are also external users. External users would receive limited financial information from a company such as financial statements. These statements are the backbone of financial accounting and they give the external users enough information to inform them of the company’s economic position. Assets, liabilities, revenues, and expenses are of great importance to users of accounting information. For business purposes, it is customary to arrange this information in the format of four different financial statements; balance sheet, income statement, retained earnings statement, and statement of cash flows. Read the rest of this entry »
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Accounting Police: Do They Exist?
Who created accounting principles? Who sets and revises accounting standards? What if you don’t follow all the rules, do you go to jail? Is there an accounting police force that investigates and arrests violators? It would seem that there must be some regulatory force to make sure that providers of financial statements conform to the rules. There is, up to a point, and here is how it works:
Mainly, it’s all voluntary and it works pretty well. First, double-entry accounting originated in Italy in the 1400′s, so its been around awhile. Accounting principles have evolved over the years just as have accounting standards. The reason why the system works is that the business community could not function if there was not commonality and consistency in financial statement reporting. It would be chaos, much like if there were no driving rules of the road.
Therefore, in the United States, a body of experts known as the Financial Accounting Standards Board (FASB pronounced Fasbee) was established in 1973, which superseded another board called the Accounting Principles Board (APB). The FASB members go through a lengthy process of analyzing and reviewing problems in the accounting field that are brought to them. After much thought, they will make a pronouncement as to what they think the new or revised way of approaching the treatment of an accounting issue should be.
They are a non-governmental organization that has private financing. A big supporter of FASB is the American Institute of Certified Public Accountants (AICPA). Many Certified Public Accountants (CPAs) belong to this prestigious organization and are obligated to abide by its guidelines and principles of behavior. Other countries no doubt have similar organizations that require high levels of accounting professional conduct. Read the rest of this entry »
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It’s Great to Pursue Accounting
Have you ever wondered what kinds of jobs are included in accounting?Well, for starters, accounting is basically summarizing financial statements. It also includes recording and reporting financial reports of companies. If you are interested in this kind of job, you have to have a college degree in order for you to be qualified as an accountant.Because of their skills, an accountant can find a job almost anywhere in the business sector. This makes the course very desirable to majority of the students who are planning to pursue a good career in the future.Statistics show that even those individuals who are already finished with medicine and other courses still show a great yearning for taking accounting. It is not just a matter of business but learning.When you deal about accounting you often associate it with numbers, computations and other aspects of mathematics. It can be true. However, you should not limit your perception there. Accounting also involves a certain level of analysis and critical thinking. In fact, most of the highly regarded accountants in the world could testify that the course is not purely math.In general term, accounting refers to the study of how business track their income and assets for a duration of time. From time to time, accountants make a thorough analysis regarding the status of a particular business. They are also responsible for analyzing the causes of the flaws of the business.Here are some of the jobs that await an accounting graduate:o Auditor is responsible for checking on accounting ledgers of the company. Financial statement is also his concern. The task of auditing is the main core of the Read the rest of this entry »