BAB 8 : AN ACCOUNTING OVERVIEW
An Accounting Overview
Accounting is frequently called the “language of
business” because of its ability to communicate financial information abaout an
organization. Various interested parties, such as managers, potential investors,
creditors, and the government, depend on a company’s accounting system to help
them make informed financial decisions. An affective accounting system,
therefore, must include accurate collecting, recording, classifying,
summarizing, interpreting, and reporting of information on the financial status
of an irganization.
In order to achieve a standardized system, the accounting
process follows accounting principles and rules. Regardless of the type of
business or the amount of money involved, common procedures for handling and
presenting financial information are used. Incoming money (revenues) and
outgoing money (expenditures) are carefully monitored, and transaction are
summarized in financial statements, which reflect the major financial activities
of an organization.
Two common financial statements are the balance sheet and
the income statement. The balance sheet shows the financial position of a
company at one point in time, while the income statement shows financial
performance of a company over a period of time. Financial statement allow
interested parties to compare one organization to another and/or to compare
accounting periods within one organization. For example, an investor may
compare the most recent income statements of two corporations in order to find
out which one would be a better investement.
People who specialize in the field of accounting are
known as accountants. In the United States, accountants are usually classified
as public, private, or governmental. Public accountants work independently and
provide accounting services such as auditing and tax computation to companies
and individuals. Public accountants may earn the title of CPA(Certified Public
Accountant) by fulfilling rigorous requirements. Private accountants work
solely for private companies or corporations that hire them to maintain
financial records, and governmental accountants work for governmental agencies
or bureaus. Both private and governmental accountants are paid on a salary
basis, whereas public accountants receive fees for their services.
Through effective application of commonly accepted
accounting systems private, public, and govermmental accountants provide
accurate and timely financial information that is necessary for organization
decision making.
Comprehension
- Answer the following question about accounting. Question with asterisks cannot be answered directly from the text. 3
- why is accounting called the “language of business”?
- How is a standardized accounting system achieved?
- What are revenues and expenditures?
- What do the balance sheet and income statement have in common? How are they different?
- *How might the information contained in financial statements be useful to managers? *How might creditors use this information?
- How are accountans classified in the United States?
- What kinds of services do public accountants provide?
- What is a CPA? *Do you have a similar type of position in your country? *Explain.
- *Which type of accounting-public, private, or governmental-appeals to you the most? *Why?
- *What are some management decisions that might be based on accounting information?
Answer :
1. According is called the “language of business” because of its ability
to communicate financial information about on organization.
2. In order to achive a standardized accounting system the accounting
process follows accounting principles and rules.
3. Revenues are incoming money and expenditures are outgoing money.
4. The balance sheet and the income statement are two common financial
statement. They are different, the first shows the financial position of a
company of one point of time, while the second shows the financial performance
of a company over a period of time.
5. The information contained in financial statements might be usefull to
creditors in help them to find out whether the company will be able to repay
the credit on time or not.
6. In United States, accountants are classified as public, private, and
governmental.
7. Public accountant provide accounting services such as auditing and
tax computation to companies and individuals.
8. A CPA is a Certified Public Accountant. Yes, we had. Formerly faculty
of economic graduates of 5 elite universities got ‘Drs….AK’ degree.
9. Personal question
10. In some company financial decision making might be based on
accounting information. For example the management want to expands its business
to build a bigger factory to introduce new variety of goods.
Opinion :
Accounting is frequently
called the “language of business” because of its ability to communicate
financial information abaout an organization. Various interested parties, such
as managers, potential investors, creditors, and the government, depend on a
company’s accounting system to help them make informed financial decisions. An
affective accounting system, therefore, must include accurate collecting,
recording, classifying, summarizing, interpreting, and reporting of information
on the financial status of an irganization.
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