Accounting - How To Succeed
Background
Accounting has been defined by the profession as "The art of
recording, classifying, and summarising, in terms of money,
transactions and events which are, essentially, financial in nature,
and interpreting the results accordingly".
Accounting relates to
the dissemination and measurement of financial information by
accountancy professionals to establish the level of performance of an
organisation. The culmination of such analysis is the preparation and
production of a set of financial accounts representing company
performance in the previous twelve months.
The accounting function is normally divided into three separate branches:
The Financial Accountant prepares and analyses the financial
data necessary for the decision makers within a business organisation.
In the case of public companies, such information, in the form of
financial accounts, is made available for public scrutiny.
Management accounting, by contrast, is associated with the flow
of company information, and is normally confidential in nature and
available only to a select group of individuals, such as board members
and accounting management.
Further, companies pay corporation tax and individual employees
pay income tax and national insurance, and it is necessary to produce
this type of financial information for the relevant tax authorities.
Accountants are accounting professionals, representative of
these three branches of accountancy. There are a number of professional
bodies who represent accountants, the most important being Chartered
accountants (ACA), Certified accountants (ACCA), Management accountants
(ACMA) and, in the US, Certified Public accountants (CPA).
A completely separate branch of accounting is that of Auditing.
An independent auditor who examines the financial statements, in the
form of financial accounts, and accounting records of the organisation
with whom he is conducting the audit, is called an external auditor.
The purpose of such an audit is to provide an independent record of the
fairness and accuracy of the accounting statements in accordance with
laid down procedures such as, in the US, the Generally Accepted
Accounting Principles, also known as GAAP accounting, and elsewhere, in
accordance with International Financial Reporting Standards (IFRS).
Some companies believe in auditing themselves, apart of an
external audit, in order to provide ongoing financial information
specifically for use by management. Such internal auditors are normally
employed by the company itself.
The financial reports,
especially the annual accounts, are not only used for the benefit of
company management, but are also invaluable to external groups, such as
shareholders, creditors and the banks. The preparation of the various
accounting reports, necessary for any business, relies implicitly on
the day-to-day production and dissemination of financial information
generated by way of double-entry bookkeeping. Accounting – How To Succeed
Peter Radford writes Articles with Websites on a wide range of
subjects. Accounting Articles cover Background, Historical, Double
Entry, Accounting Software and Applications.
Website has many more.
View his Website at: accounting-how-to-succeed.com
View his Blog at: accounting-how-to-succeed.blogspot.com
