Introduction
Accounting is an important aspect of any business entity as it provides financial information which is useful in decision making. There are many users of financial information such as managers and potential investors which makes accounting a crucial tool. It is through accounting that people are able to interpret different data regarding a business enterprise and draw conclusions. This report is going to look at different aspects of accounting and how it is affected by technology.
Discussion
One of the objectives of accounting is to record business transactions. Any financial transactions conducted on behalf of an organization such as purchase of assets are recorded for future reference. They are later used in the preparation of financial statements such as the balance sheet. It is through accounting that the profit or loss of a business is calculated. This is done through the preparation of a profit and loss account which shows how profitably a business is operating (Label, 2010).
Accounting is also used to determine the financial position of a business. This is done through the balance sheet which gives information about the assets and the liabilities of the business. Through the use of reports, charts and statements, information about a business is communicated to different parties. Such information is useful for decision making purposes (Label, 2010).
Through financial reporting, accounting information is passed to different people through the use of financial statements. The basic terminologies include debits, credits, assets, liabilities, revenue and expense. In the accounting process, transactions are either debited or credited. Debit entries add value to the account and are entered on the left side of a journal while credit entries lower the value of an account and are entered on the right side. Assets are items that a business owns such as cash while liabilities are those that the business owes others such as short term loans. Revenue refers to income gained by a company through its main activity while expenses refer to resources spent on the normal running of a business like the payment of electricity bill. Other important terminologies include balance sheet and income statement. The balance sheet is a statement that shows the assets, liabilities and capital of a business while the income statement shows the performance of a business in terms of profits or losses made within a specific period of time (MacLaney, & Atrill, 2008).
The accounting profession has an impact on the lives of accountants as they tend to apply most of its ethical requirements into their personal lives. Practicing as an accountant has made me a person of integrity. I am honest in all my day to day activities and I do not intentionally give misleading statements. For one to be a successful accountant I believe they have to create a good reputation and display unquestionable levels of integrity; this has positively affected my personal life. I uphold a high degree of confidentiality regarding personal information that I receive from people I interact with. The accounting code of conduct expects accountants to hold all financial information of an organization in confidence. Because of the need to make timely decisions in accounting, I tend to act on personal commitments in a timely manner and in the best way possible.
Accounting in small businesses has largely been influenced by technology. It can be a tedious and time consuming process if done manually. Through the use of technology, a lot of time is saved enabling small business owners to spend it improving their businesses. Financial technology has therefore helped small businesses to grow. Through simple to use accounting software, transactions can be posted daily which makes it easy to generate financial statements at the end of a period. Owners of small businesses are able to manage their accounts without having to hire an experienced accountant which acts as a cost cutting mechanism (Gelinas & Dull, 2010).
Technology also assists business owners who do not have much accounting knowledge to come up with accurate financial reports. Due to the accuracy of accounting software, appropriate decisions are made. Preparation of tax returns is also made easier through the use of technology. Small businesses are in a position to calculate tax estimates and therefore make budgetary allocations which facilitates their growth. Technology helps owners of small businesses to keep track of all important information necessary for the accounting process. Technology reduces the number of assets that small businesses need to purchase for the purpose of accounting. Calculators and ledgers do not need to be purchased as the business owner or accountant may only require electronic spreadsheets. Through accounting software, data necessary for auditing is more readily available therefore ensuring that accurate audit reports are maintained (Gelinas & Dull, 2010).
Conclusion
Accounting is an interesting field that makes an accountant become keen to detail. It is an important department of any organization as most of them are established to maximize profits. Through cost accounting, firms are able to allocate resources in the most profitable manner. Technology has eased the accounting processes of both small and large firms and should therefore be embraced by all organizations.
Reference list
Gelinas, U., & Dull, R. (2010). Accounting information systems. Australia Mason, Ohio: South-Western/ Cengage Learning.
Label, W. (2010). Accounting for non-accountants : the fast and easy way to learn the basics. Naperville, Ill: Sourcebooks.
MacLaney, E., & Atrill, P. (2008). Accounting: an introduction. Harlow etc: Prentice Hall/Financial Times.