Реферат The work of the accountant
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The work of the accountant.
The work of the accountant is said to be diverse in nature. Basically, it deals with recording, summarizing, analyzing and verifying business transactions in books of accountants. The task of examining and analyzing accounts is one of great significance. It makes it possible to provide information necessary for economic management. There is usually an unlimited supply of data available in an enterprise. The key problem facing accountants is the selection for presenting to the management only meaningful information. And the accountant is effective if he supplies information promptly and in a clear language. Great changes are known to have taken place over recent years. The role of the accountant has changed and his functions have deepened and widened. The old book – keeper is a legend now. He was described as a dried – up narrow – minded person ignorant of everything but tedious operations with figure. The modern accountant acts as an adviser to the management and helps the latter in decision – making. Under modern conditions only accountants can minimize the degree of uncertainly inherent in every business decision. Accountants enable the management to assess their own performance. They also help them device ways to improve their efficiently.
The birth of accounting in
Accounting emerged in the eleventh century in
Accounting in Tsarist
The development of industrial accounting in
The nature and purpose of accounting.
The purpose of accounting is to provide economic information. It permits users of that information to make informed judgments and decisions. Users of economic information require this knowledge to help them decide how best to allocate available resource. Resources are scarce in relation to need and users rely on accounting reports to ensure the efficient and effective allocation of supplies. Some of the major users of accounting information are owners of business, lenders of money, such as banks, suppliers of goods and services, managers of a business, customers of a business, employees, governments, the public, competitors. The major decision confronting owners and potential owners is whether or not to invest or retain an investment in a business, shot – term lenders will normally be concerned with the “liquidity” of the business. Long – term lenders are concerned with the prospects of the business is able to pay for the goods and services provided. Managers must make different kinds of economic decisions and require different accounting information. The current financial condition of the business and likely future performance will be of interest for customers. Employees will require information concerning changes in employment levels and the ability of the business to meet pay demands. Governments se information on profits made in order to assess liability for taxation, members of the public may wish to assess whether or not the business is a “good citizen”. Competitors may consider taking over the business.
Desirable qualities of financial information.
In order for accounting information to be considered useful it should possess certain qualities. There are relevance, objectivity, timeliness, comparability, understandability. These qualities may at time be in conflict with one another and some compromise between them may have to be made. The view as to what constitutes a satisfactory compromise may vary between users. Accounting information is said to have relevance if it has the potential to influence the decisions and judgments of users. Irrelevant accounting information provides no benefit to users and does not justify the costs of producing the information. Objectivity or impartiality can be divided into two elements^ verifiability, and freedom from bias. Verifiability means that qualified accountant handling the same basic data but working independent would produce the same results. Freedom from bias suggests that the information produced will not favor the interests of a particular group of users at the expense of another. Accounting information should by timely in the sense that it should be produced reasonably soon after the end of the accounting period. Other wise it will lose the relevance. Timeliness also means that the reporting intervals should be frequent enough. Comparability suggests that it is useful if items and events common to different businesses are measured and presented in the same manner. To possess the quality of understandability accounting information should be set out in a clear and logical main.
The types and titles of accounts.
Sometimes large amounts of data are gathered in the measurement of business transaction. So a method of storage and retrieval of information is required. In other words, there should be a filing system to sit out or classify all the transaction of business. This filing system consists of accounts. An account is the basic storage unit for data in accounting. In its simplest form an account has three parts a title that describe the asset, liability, or owner’s equity account, a left side, which is called the credit side. This form of account called a T account is used to analyses the account is a debit, or debit entry. And any entry made on the right side of the account is a credit, or credit entry. The most commonly used types of accounts are Asset Accounts, Liabilities Accounts and owner’s Equity Accounts. In a manual accounting system each account is kept on a separate page or card. These pages or cards are placed together in a book or a file. This book or file, which contains all groups of the company’s accounts, is called a ledger. In a computer system, which most companies have today, the accounts are maintained on magnetic tapes or discs. Accounts are numbered and a list of these accounts is called a chart of accounts. Different companies have different charts of account.
The double – entry system.
The double –entry system, the backbone of accounting, avouched during the Renaissance. The first systematic presentation of double – entry book – keeping appeared in 1994, two years after
The conventions of accounting.
Accounting is a language through which financial and economic information is collected, stored, analyzed and classified. Finally it is communicated to users. Accounting has gradually developed and it has also adapted to meet the needs of users. Certain rules have emergent in accounting to meet practical needs. The most important of these rules or conventions are referred to as concepts. The basic accounting concepts of International Accounting Standards are fair presentations, accruals, going concern, consistency, materiality and aggregation. The concept of fair presentation means that all financial statements should contain adequate information. This information concerns the financial position of an enterprise. All the financial statements should be prepared on the basis of legislation and in the context of accounting practices. The concept of accruals states that profit or loss for a period is the difference between the total revenues and total expenses for that period. The concept of going concern asserts that it is assumed that the business will last indefinitely. The concept of consistency assumes that accounting treatment of like items is the same and it requires similar methods to be used from year to year. The concept of materiality and aggregation assumes relative importance of an item and offers reasonable approximations.
Financial statements are a central feature of accounting.
They are the primary means of communicating important accounting information to users. Four major financial statements are used to communicate the information about the business. Each of them deals with a particular aspect of financial conditions. The first financial statement is the income statement or profit and loss account. It summaries as the amount of revenues earned and expenses incurred over a period of time. Many people consider it the most important financial report. But the income statement has one major deficiency. It only shows the changes in financial position and many events don’t appear on the income statement. The second financial statement is the balance sheet. Its purpose is to show the financial position of a business at a particular time. The third financial statement is the cash flow statement. It shows a company’s sources and uses of cash during a accounting period. Users of financial and external users. Management is the main internal user. Creditors and investors are external users.
The balance sheet.
The balance sheet shows what a company owns and the sources of financing there assents. It also shows operating activities by share – holders and by borrowing. It is a “snapshot” of the company’s financial position at a specified time. The balance sheet consists of three major sections assents, liabilities and equity. These sections are arranged differently from country to country. The assets of a company are often divided into two categories current assets and non – current assets. Current assets include cash or the assets that are expected to be realized in cash or sold during a normal operating cycle of a business. Temporary investments/ accounts and notes receivable, inventory prepaid expenses are also current assets. Non –current assets include property, plant and equipment, fixed assets normally stated at net book value. The assets which are expected to remain in the balance sheet more than one year fall into non – current assets category. Liabilities are made upon mat gages, payable long – term notes, bonds payable, employee pensions, long – term and current obligations. They are also split into current and non – current liabilities. Owner’s equity can be defined as the resources invested by the business. Owner’s equity is assets minus liabilities.
Financial accounting.
Accounting can be defined an information system. It measures processes and communicates information that is useful for decision – making. Financial accounting refers to accounting information that is used by management. This information is also communicated to those outside the organization. So financial accounting reports provide a general ever view of the financial health of a business. Financial accounting reports rarely include forecast information. They are black ward – looking and focus on actual results achieved. Financial reports usually contain certain basic information of reasonable quality. The information is produced in a uniform way. A set of practices has developed to provide guideless for financial accounting. The term used to ascribe them is generally. These principles encompass the conventions, rules and procedures. The standards applied for preparation of financial statements are called the International Accounting Standards or IAS. The IAS Committee develops them.
Management accounting.
An accountant employed by a business for internal reporting to the management is s management accounting. Management accountings have a broad and intimate view of a company’s operations. Management accounting is concerned with the provision of economic information. This information is an aid to managerial decision – making and control. Thus managers can select appropriate strategies for incorporation into their plans. Sometimes there is a significant devicition between, actual and planned performance. As managers dictate the volume and format of the information, variations in management accounting practices arise. Despite there variations managers need three kind of accounting information. There are product costing for pricing and inventory valuation, cost analyses for operational planning and control and analyses for management decision – making. To evaluate analyses and reporting techniques. To do their work properly management accountants should be highly qualified.
Accounting for transactions in foreign currencies.
It is natural for businesses to look for new sources of supply and new markets in other countries. Today multinational or trans national corporations operate throughout the world. In addition sophisticated investors don’t restrict their investment activities to the domestic securities market. Most sales or purchases of goods and services in other countries involve different currencies. Thus, one currency needs to be translated into another, using exchange roles. An exchange role is the value of one currency in terms of another. In effect, the currencies are goods that can be bought and sold. Their prices change daily according to supply and demand for a certain currency. The problem with currency translation arises because of the valuation systems used in conventional financial statements. In the
Legal base and formal directives for accounting and reporting in
Accounting practices are regulated thought the decrees of the Ministry of Finance. All accounting provisions are established by the Ministry of Finance. These provisions are based on the legal standards for all organizations on
Specific features of accounting in
Accounting practices in
The use of computers in accounting in
Most accounting work in Russian business today is done by computers. Computers allow businesses to centralize accounting operations and eliminate much of the work that used to be done by hand. Thanks to the development of minicomputers and minicomputers even small organizations can keep their accounting records in electronic form. The term data processing can mean the manual writing up of accounts or the keeping of accounts by a computer. If a clerk writes up the entries in the accounts, this is manual data – processing. If accounts are kept using an accounting machine, this is automatic data – processing. But the principles governing such entries remain the same whether manual or computer methods are in use. Automatic data – processing is much quicker and there are fewer errors. Therefore large businesses in
Accounting in the future.
It is well recognized that accounting has played a crucial role in the development of human society. Due to the growth of industry the needs for accountants has increased. This trend will continue in the twenty – first century. Such new fields of accounting as social accounting, tax accounting will develop. In the twenty first century the world will continue to move towards a single economy. As a result the uniformity of international accounting standards may appear. Establishing international accounting standards will save corporations time and money. It will improve the comparability of accounting in formations manufacturing methods and information processing is developing rapidly. Accounting methods will have to adapt to the changes. Another important trend is connected with computerizing accounting work. So, accountant of the twenty first century will use only electronic equipment. The accountant of the future will be involved in system design activities. Accountants will consider and analyses the structure and the flow of information.