Meaning and Definition of Accounting

Accounting is the definitive process of recording the financial transactions. It gathers, organize, retrieve, summarize, and presenting the outcomes in different kind of analyses and reports. Accounting is also known as accountancy. This is the field of study which is dedicated to the measuring, preparing and finally communicating the financial as well as non-financial information of the business entities. The accounting practitioners are known as the accountants. The terms financial reporting and accounting are very synonymous. Other than that, it is also known as the language of businesses which records and analyze all the mandatory financial transactions of the organization. The reports generated by the accounting methods are used by the investors, regulators, stakeholders, creditors and the management of the company.

Fields of Accounting

Accounting is further categories in different fields. These includes management accounting, financial accounting, cost accounting, tax accounting, and external auditing. There is specific Accounting information systems and these are specially designed for supporting the functions of accounting and other related activities. Here is the list of several subfields and subject areas:

Financial Accounting

The Financial accounting is the field that majorly focuses on the reporting financial information of the organization. It involves practices like preparing the financial statements. Later these systematically generated information is used by the external users such as regulators, stakeholders, suppliers, investors. The systematic recoding and calculations are used for the business transactions. It helps in preparing best financial statements that are accessed by external users. Generally accepted accounting principles (GAAP) is the major thing that works behind this systematic recording of accounting. The GAAP defines the wide collaboration between accounting practice and theory.

The changes are made over the time to meet the special requirements of decision-makers. Also, financial accounting generate reports that are past-oriented. Here is an example for that: the financial statements of 2018 reports according to the performance in 2017. These are prepared on quarterly and annual basis by the organization. The field of financial accounting is also studied as the significant part of the board exams for getting qualification as an actuary. The two major type of professionals here that manages financial accounting are: actuaries and accountants.

Management Accounting

The management accounting is the branch of accounting that focuses on analyzing, measuring, and reporting of financial information. The management accounting is for internal use. The systematic record of financial transactions is as bookkeeping. The double-entry bookkeeping is the majorly used and most common system. The management accounting is used by the managers for better decisions making. This helps in fulfilling the organizational goals.

The management accounting uses the internal reports and measures on the basis of cost-benefit analysis. For the management accounting it is also necessary to follow the generally accepted accounting principle (GAAP). The CIMA formed the Global Management Accounting Principles (GMAPs) in the year 2014. This was based on the research from across 20 countries. These are the principles that aim to provide the best guidance and practice in the discipline. The procedure of the management accounting considers the future-oriented reports. For instance, the budget for 2008 is prepared in 2007. The complete span of reports are different. These kind of reports also includes the non-financial and financial information.

Auditing

This is the verification of contention made by others. In the prime context of the accounting, the auditing works regarding the payoff. In more clear words, the auditing is the impartial evaluation, analysis and the examination of the financial statements of the company. The audit is a very professional method which is very conventional and systematic. The objective of the financial statements audit is to express the independent opinion after clear observation of everything. The auditor is responsible for conveying the accurate opinion. The financial statements generated by the audit presents the results of operations, financial position, and cash flows of the organization. This also works according to the generally acceptable accounting principle (GAAP). The auditor is also responsible for the identification of the circumstances under which it is required to apply the generally acceptable accounting principles (GAAP).

Accounting Information System

The accounting information system is significant part of the information system of organization. This is the system that is used for processing the accounting data. The business corporations often consider using the artificial intelligence-driven information systems for this. Even the finance and banking industry utilizes the Artificial Intelligence for fraud detection. Same is with the retail industry where retailers are using Artificial Intelligence for providing the customer services. Artificial Intelligence systems are also utilized in the cybersecurity industry. These systems works on the mechanism of statistics and modeling. These are used by the both the software and hardware systems of the computer.

The Basics of Accounting

This accounting basics consists of accounting concepts, accounting principles, and accounting terminology. These are some of the concepts and terms that are necessary to understand for every accounting student. The common accounting terms that students ever come across are expenses, revenues, income statement, assets, liabilities, statement of cash flows and balance sheet. The accounting debits and credits record transactions. There are two basic accounting principles: the matching principle and the revenue recognition principle. These principles gives surety that income statement reports of the company works for the profitability.

What is Accounting Error?

There is one simple definition for the accounting error. This is an unintentional error that can occurs anytime in the accounting entry. It is possible to fix it immediately fixed right after spotting it. There is no need to be confused. The accounting error should never be confused with fraud.

The accounting basics explanation can be acquired using the materials. The students often omit some accounting details which creates complexities. This makes it mandatory for them to present concise and clear explanations. The students should always seek professional guidance for these kind of circumstances. BookMyEssay provides the best tutoring services to the students all across the world. For more details visit the website.
Topic revision: r1 - 16 Jul 2020, BookMyEssay
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