Accounting is a methodology by which a company or financial entity measures, discloses, or provides assurance about the financial information of a company that may be used to act as an aid to managers, investors, tax authorities and other decision makers to reach decisions regarding resource allocation. Financial accounting is a branch of accounting that throughout history has required processes to record, classify, summarize as well as interpret and communicate all financial information concerning the business. In other words one can think of accounting as being the “language of business” and accounting forms as the medium upon with that language is communicated.
The heart of accounting is the measurement of financial transactions that are meant to transfer the legal property rights that are performed through contractual relationships. Accounting specifically excludes non-financial transactions because of the need for conservatism as well as principles of materiality. Persons that practice accounting are known as accountants and it is necessary to have a number of different professional bodies that are formed by accountants all across the globe. There are titles given to different accounting personnel such as Chartered Certified Accountants, Chartered Accountants, and Certified Public Accountants.
The use of accountancy methods allows companies to create accurate financial reports and accounting forms that are of great help to managers, regulators, shareholders, creditors and owners. When the day-to-day business transactions are recorded in the books of the company, the method used is known as bookkeeping. The heart of the modern financial accounting system is called the double-entry bookkeeping system.
Double-entry bookkeeping systems require at least two entries for each transaction, one being a debit and, the other a corresponding credit. It is imperative that the sum of all debits exactly equals the sum of all credits and, if it does, then it is a promising sign that the entries have been properly recorded. Such a system first found use in medieval Europe, though some claim that it was practiced much earlier in Ancient Greece.
To get into the profession of accountancy, one would need to attain certain qualifications based on the country in which they intend to practice. An accountant needs to be licensed by a number of organizations, mostly at the state and country level although it is not always a legal necessity for an accountant to be a paying member of any one of the institutions and bodies that are in the business of providing such licenses.
There are different types of accountancy including cost accounting, cash-basis and accrual basis accounting, financial accountancy, fund accounting, internal and external accountancy, management accounting, project accounting, positive accounting, environmental accounting and social responsibility accounting. In addition, accounting principles, rules of conduct and actions can be described with the help of different terms like concepts, conventions, tenets, assumption, axioms and also postulates.
An oft cited criticism of accounting is that it has not changed much and there is need for affecting reforms to keep up with the changing business needs and because of the need to keep accounting relevant to changes in capital assets or production capacity. That is not to say that the basic principles will change; for these should be independent of dynamic economics. Of late, there has been deviation in accounting from economic principles that has ended up with controversial reforms being affected in order to make financial reports more pinpointing of economic realities.
Archive for September, 2011
Is Your Accounting Or Finance Department Measuring Up Or is it Down For the Count?
Sunday, September 25th, 2011Personal Finance – Successful Financial Budgeting Tips
Saturday, September 24th, 2011
Personal finance has always been one of the crucial aspects of success of an individual. Execution of one’s personal finance budget often requires discipline and perseverance. Many people obtain assistance from professionals such as accountants, financial planners, investment advisers, and lawyers.There is also personal financial software to help with your financial budgeting which saves a lot of money and certainly your time.
Financial budgeting is the key to unlock your monetary success as well as your means of reaching your goals and dreams. Everyone wants to pay all their bills on time. Successful debt and asset supervision is the starting place for good credit. Unless you have unlimited funds to spend however you wish, the place to start is with good personal budgeting skills.
Here are some helpful tips in creating your personal finance budget:
Create a personal household budget which includes all your monthly and yearly bills. You must also include your spending money, savings goals, and retirement funding. It doesn’t matter how much money you make, it’s how you spend it. A personal and household budget will help you make payments on time, provided you follow the plan. Aim for your housing expenses to be about 33% of your income. If that is not possible, cut some expenses or look to at ways you can make more money. Follow a debt management program. Your debt may overtake your income and then you are forced to make late payments on bills or no payments at all because you don’t have the money. This becomes expense and can topple you over. A total debt payment (which ideally should be zero!) shouldn’t exceed 30%. If it does, look to consolidate and chop ups some store cards with high interest. You can’t just spend money and hope you have enough for your bills. You must spend within a budget. Use personal financial software to save you time and accounting fees. The software will ask the same questions that a personal finance advisor asks, without charging you a high hourly rate, during a financial planning interview. Everything is already put in to the software so you don’t have to start from scratch or think too much.
A strong and stable financial situation has always been the short route towards a sound and independent financial situation. Maintaining control over your personal finance enables you to maintain control over more aspects in your live than just money and it all starts with having a good budget and sticking to it.
The Future of Finance Jobs
Saturday, September 24th, 2011
In the not so long-gone past, many career advisers were advising young people seeking to start out a career to go into finance. The financial markets were doing well then, finance jobs were in plenty and MBA schools were bursting with young students seeking to build a career in finance. And the finance jobs were, of course, not limited to the financial markets. With a strong economy, finance graduates who couldn’t get jobs in the financial markets and investment banks could quite easily be absorbed into commerce and industry accounting jobs. Other would get middle office finance jobs in the public service, and going was good.
Then the bubble burst.
The economy went into recession mode, the financial markets shrunk and finance graduates who had taken up jobs with investment banks found themselves facing the axe, as the investment banks are the worst affected by turmoil in the financial markets. And as if on cue, companies, in a bid to cut costs, were also cutting on their head counts, thus also shaking the fortunes of the finance graduates who found commerce and industry accounting jobs in the private sector. In the midst of all this, it seems that the only secure finance graduates are those who took up middle office finance jobs in the public sector, but even this is not fear-proof for we do not know for sure what the full effects of the economic turmoil will be on civil service staffing.
So in the face of all this, what is the future of finance jobs?
It might seem counter-intuitive to say, but the future of finance jobs is still bright, in spite of the current turmoil in the financial markets. As it were, economists tell us that the current economic turmoil is largely short-term to medium term, which is to say that it won’t be with us forever. Which means that the people who chose to pursue a career in finance need not regret their choice, as better times are coming. But even before the better times arrive, the people with finance backgrounds who are currently getting laid off might not find themselves in the cold for too long.
As governments unveil the various economic stimulus plans, there will be need for people to manage the money as it goes into various sectors – which translates to some finance jobs. Of course the finance jobs created in this way will be for the best brains in finance.
And then there is the fact that all companies, like human beings, have a native survival instinct, which they are likely to find handy in these hard economic times. One survival strategies for companies in crises is to hire the experts who are likely to navigate them through the particular crises. And since the current crisis is financial, the companies are likely to find themselves hiring financial experts to help them address the economic crisis. Of course, the companies are not likely to be overtly looking for finance experts to help them address the financial crises. What we are likely to see is an increase in commerce and industry accounting jobs, but the accountants so hired are bound to be almost exclusively tasked with cost and revenue management tasks, geared towards helping their employers sail through the turbulent times successfully.
And finally the good times will surely come back again. If the history of the financial markets is anything to go by, we know that all bursts are always followed by booms.