The Importance of Basic Accounting Knowledge in Business

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After completing my first year of business classes at West Chester University, I realized how important accounting knowledge is for any business major. Regardless of the field of business that you choose to pursue, whether it be marketing, management, economics, or finance, you will need to be able to have at least a basic understanding of accounting. Every business has to deal with observing and understanding source documents, income statements, balance sheets, and statements of retained earnings in order to be successful in today’s business world. Anyone interested in entrepreneurship who is looking to start their own business will have a definite advantage if they can understand financial statements of accounting. The truth is that accounting exists in our every day lives whether you realize it or not, so being educated in the field will do nothing but help you in a future business career.

The process of accounting will almost always begin with source documents. In the past, most of the source documents that CPA’s (Certified Public Accountants), auditors, and other accountants would have to deal with were tangible paper documents such as receipts from a recent purchase at a store. The accountant would then have to transfer these source documents into a journal to start the accounting process. Today, most of the source documents are electronic. When a purchase or sale is made between any two businesses or consumers, it is filed into a computer on an electronic database. This method has made accountant’s jobs far more simplistic, as they can they place the transaction directly into an electronic journal on Microsoft Excel.

The basic accounting equation that anyone who works in business should know, is that Assets= Liabilities + Equity. Assets include accounts such as cash, land, building, equipment, office supplies, inventories, and accounts receivable (money owed to you by a customer). The normal balance for these assets are a debit, which means if you are gaining any of the previous, you debit that amount of money towards that account. For example, if a sale is made in your store and a customer pays fifty dollars cash, then you would debit the cash account for fifty dollars. Liabilities include accounts payable (what you owe others on account), unearned revenue (you have been paid but haven’t performed a service), salaries payable (salary money owed to your employees), taxes payable, and interest payable. The normal balance that increases these accounts is a credit, unless the account is a contra account in which the opposite normal balance applies. Equity accounts include dividends (money owed to your stockholders), revenues and expenses. The normal balance for owner’s equity is a credit, but expenses made by your business are always treated as contra accounts. So for a transaction where a customer purchases something from your store on on account, you would debit accounts receivable and credit revenue. Each transaction is then recorded into a journal organized by month.

At the end of each month, the totals are added up from the journal and are placed into what are called “T-Accounts”. These are T-shaped charts with the debits on the left side and credits on the right. It is used to more easily find the ending balance of each account at the end of the month. After the totals of each account are found, you can now make an income statement to determine your amount of money lost or made during the month. The amount of income can be found by subtracting the expenses from your revenues. This is one of the most important financial statements that accountants have to deal with. Your income statement helps you determine if you are making profits or if you are losing money and need to improve a sector of your business.

Once you have transferred all of your journal entries into T-accounts and have made an income statement, you are then prepared to make a balance sheet. This is the basic accounting equation in which you make sure that Assets = Liabilities + Owner’s Equity. When you sum all of your asset accounts they should be equal to all of the liability and equity accounts as well. This is why anyone in any type of business should always have a basic understanding of the accounting process. With the knowledge of how money flows throughout a business, you can make wiser, more experienced decisions with your business, and protect yourself from losing money. It also allows you to take risks with your business and potentially gain a big return when it comes to the bottom line of your income statement. I’m pleased to say that I can now understand a company’s financial statements and comprehend the transactions that go on in every day business. Any business student will be more successful in their future career if they learn the crucial basics of accounting.



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Accounting jobs in Gulf Middle-East Countries -Dubai -UAE ,Doha-QATAR . Muscat-OMAN , Riyadh-SAUDI ARABIA ,KUWAIT

Accounting jobs are becoming more popular nowadays because of the emergence of so many businesses and new companies in gulf and middle east countries. Among these accounting jobs are administration jobs. Accounting jobs are expected to grow faster than the average for all occupations.

Accounting jobs are plentiful. Investment management type jobs (which like to see their front office employees pursuing the CFA) are super competitive, akin to investment banking. Accounting jobs are stable and easy to come by if you have the right tools.

Accounting jobs are available with public accounting firms, government, corporations and with self-employed certified public accountants.Accounting jobs are as prominent in most cities as they are in any other area of the country, with many graduates working for the big firms. Accounting jobs are mainly certified public accountants (CPA) and registered public accountants (RPA), and may also include auditing, bookkeeping, credit analysts, and reports preparation.

Accounting jobs are highly skilled, highly lucrative and highly sought after. In places like Dubai, Abu Dhabi, jobs in the accounting field are opening faster than they can find people to fill them. Accounting jobs are increasing because of tougher financial laws and regulations in the  wake of the after effects of current downturn . Employment for financial analysts and personal financial advisers is expected to increase faster than average as well, as business and individuals invest more.

In a field like auditing, where skills are more transportable, there is still some resistance to hiring from outside the country. The concern can center on the candidate’s communication skills; many accounting jobs have to deal with clients in a face to face environment and the accountant’s comfort in English is paramount.

Accountants are considered strategic business partners of their organizations and work in a variety of different areas. They are generally smart people who can help you solve sticky problems. Accountants are concerned about how collect data should be used whereas number crunchers are busy thinking how data should be collected. If simple number crunching was what was required, then artificial intelligence of computers would be sufficient, but employers want to look for accountants who are emotionally intelligent and are team players.

Like the rest of the world’s major centers there is a trend of being employed for the accountant job in Dubai ,Doha, Riyadh ,Muscat and Kuwait is being perceived as an honor.

Accounting is the practice of collecting and measuring data in order to allocate resources. People are needed to monitor, evaluate, and produce financial and resource data for accounting. There is a pool of specialties to choose from when considering where to develop accounting expertise.

Accounting can be broadly classified as either general accounting or auditing. Accounting is specific to managing a business’s finances by keeping track of payroll and company expenses. Auditing is a practice where records are reviewed and a conclusion is reached to provide a recommendation for action. An auditor reviews records managed by accountants to determine their correctness.

Accounting careers have the following specialties:

Bookkeeping

The term ”bookkeeping” is generally used to refer to recording financial transactions. The job of a bookkeeper (also called an accounting clerk), is managing records with regard to purchases, sales, receipts, and payments.

Accounts Receivable

”Accounts receivable” refers to billing customers using a sales ledger and creating a receivables entry, which is also reflected on the balance sheet.

Accounts Payable

Accounts payable is a form of debt that the company owes its suppliers. Accountants working in accounts payable receive bills from suppliers and create accounts payable entries.

Tax Accounting

Accountants who are experts in tax matters manage tax accounting. Their job primarily involves preparing tax returns for their company.

Cost Accounting

The job of a cost accountant is to track, record, and analyze costs. This form of accounting is used to manage company costs and improve profitability.

Payroll and Timekeeping

Payroll and timekeeping clerks keep track of workers’ time sheets and payroll. They ensure that employees are paid on time and that their paychecks are accurate.

Conclusion

No matter which field of accounting you choose, for a successful accounting career it is important to be comfortable using spreadsheets and other financial and accounting software such as QuickBooks and Microsoft Excel.

Financial Accounting ACG2021 SFCC Spring 2008 Crosson Chapter 2

The strange and confusing world of Canadian accountants

The strange and confusing world of Canadian accountants

The word “accountant” is not protected by legislation in Canada. Anyone can claim to one. I’ve seen people call themselves a practical accountant, small business accountant, tax accountant, registered public accountant and many other similar names.

To complicate matters there are three accounting bodies recognized by legislation – Chartered Accountants (“CA”), Certified General Accountants (“CGA”) and Certified Management Accountants (“CMA”). They have varying amounts of experience, skill and training. Another organization – The Association of Chartered Certified Accountants (“ACCA”), which is not recognized by legislation, and claims to be the global body for professional accountants, offers their services. There are also thousands of Certified Public Accountants (“CPA”) from the United States and elsewhere.

For a country of about 34 million the accounting landscape is very complex. Contrast this with the United States, with a population of over 300 million, where a single designation is the most prominent – Certified Public Accountant.

Given all the choices how do you pick a Canadian accountant? I’m a Chartered Accountant (and a licensed public accountant in Ontario), and perhaps a little biased, but I believe Chartered Accountants are the best option. Regardless, start first by deciding why you need an accountant. Often the need is to prepare a tax return, help with special tax situations and planning, bookkeeping or just general advice. Then develop an image of the ideal accountant and try to find a match. Get a referral from your banker, a business colleague or friend that uses an accountant or knows one. A referral from a trusted source is one of the best ways to find a good one.

If you are a business owner, and give your financial statements to anyone other than the tax department, you need a licensed public accountant. Almost all public accountants in Ontario are Chartered Accountants but in the rest of the country a public accountant could be a CGA or CMA. If you don’t distribute financial statements, or are not a business owner, you can usually pick an accountant of your choice – licensed or not. 

If you come up short check the member directories of the accounting associations. Every professional body maintains a complete list of members and the directory is searchable.

Another way is to search Google. Search for the word “accountant” and the city where you live. We’re located in Mississauga, Ontario, Canada so you’d search “Mississauga Accountant” or “Accountant Mississauga” and the names of local accountants are listed. Google is a good way to find names but not necessarily the best accountant.  

Accounting Ethics Courses: Optional or Necessary

Ethics and high morality are in high demand today especially among corporate America, and specifically within the accounting profession. After the ethical failures of Enron and WorldCom, a public outcry for future preventative measures resonated throughout the American Institute of Certified Public Accountants (AICPA), and the accounting community at large. Consequently, the Securities and Exchange Commission (SEC), the overseeing government board of the AICPA, released the Sarbanes-Oxley Act of 2002, otherwise known as SOX. The act requires a higher performance standard for accounting firms and the audits they perform to prevent future accounting scandals. SOX, which has been extremely beneficial, doesn’t change the ethical standards of an individual but instead takes away most of the opportunity to commit a scandalous act. The basic character of the fraudulent individual remains corrupt, even with legislation in place. The question is then posed: Can ethics be taught, and if so, what accounting or business ethics courses are available? The answer is not ironclad as the word ethics describes the morality of an individual, which is hard to measure. There are also very limited courses offered on ethics, however ethical education should be a required course in college and a prerequisite to new employment for all accounting firms.

Most higher education institutions, and some high school level institutions, are implementing brief ethical materials into their curriculum, but very few offer courses on the subject. The basic argument against incorporating a required accounting ethics course is that there isn’t any proof that individuals who take a course would be any more ethical than they already are. If this is truly the singular obstruction to imposing an accounting course in ethics, than why aren’t other courses in the curriculum subject to examination from proof. Many audits, specifically those at Enron and WorldCom, have failed because of poor functional accounting knowledge, not just ethical queries. Most other curricular accounting courses would fail a proof assessment required by those who oppose an accounting ethics course. It is necessary to have an accounting ethics course to properly prepare students for any future ethical temptation they may experience within the field. Without experience in fraud recognition or ethical righteousness, many new timid accountants are susceptible to fraud or ethical dilemmas. A recommendation would be to add not just one course on ethics into a curriculum, but possibly three or four. A course in ethical theory could tie into another ethics course involved in spotting frauds and ethical dilemmas while a third course could focus on answering these ethical uncertainties.

The need for an accounting ethics course is also very apparent in how much destructive attention financial catastrophes attract to the profession. The recent big company accounting scandals all brought negative publicity to the accounting field. The burden of the economic failures in today’s society must be placed somewhere, and many people look at accountants as an outlet to place that burden. All of these events from big companies provide a negative perception of the accounting field, and that’s not to mention the small business owners who have encountered other accounting mistakes or unethical occurrences. This is not to say that legitimate and honest mistakes will not be made by new students, but the ability to recognize the mistakes and evaluate ethical problems can be reduced with the addition of an ethics course. The more education and experience that new accountants have and acquire the fewer mistakes that will occur, and ultimately the less negative publicity the profession will receive. It is extremely important that in the accounting profession, clients feel secure and trusting of those who they employ.

Another need for an ethics course comes from a common stereotype of accountants. The stereotype is that accountants are known to simply follow the rules, or do just enough to meet the basic criteria. To correct ethical dilemmas, it is required to go above and beyond the norm to investigate and solve uncertainties. A class in the area of ethics could help prepare and motivate new accountants to become more proactive when evaluating a possible unethical or fraudulent scenario. Clients will feel a greater sense of security with a proactive accountant, and ultimately bring more profit to the profession.

Society can not function without ethical people. The business world and accounting profession can not function without ethical people. It is for this reason that an accounting ethics course or courses are imperative. The elimination of stereotypes, fewer mistakes, and a heightened sense of awareness is exactly what could be acquired from an accounting ethics course. It is important to add ethics courses immediately, and for employers to require that their new hire’s be educated in ethics knowledge. If an employee is not educated and courses are not offered, employers should take measures to offer a mandatory ethics course within their organization.

Emanuel Saxe Accounting lectures from Baruch College


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A video summary of chapter 7 in Perdisco’s Financial Accounting 360Textbook. To find out more, visit www.perdisco.com/finacc
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Follow the Magical Accounting Rules

To make sure that financial statements are easy to understand, there is a set of rules and practices that is established, which is known as the generally accepted accounting principles (GAAP). This has been developed to provide a basic guideline for the rules of accounting because I think it’s fair to say that it can get confusing at times. There are a lot of variations to the meaning so here is the best answer. It’s the generally accepted accounting rules and procedures that are necessary to define accounting practice.

Basically it’s a set of theories that accountants come to accept, and there are always controversies with some methods between accountants like any other field of study. Accounting is a discipline that is always growing and changing so it’s a good idea to keep up to date with all of the trends that are going on. Since the management prepares the financial statements of a company it is possible that a financial statement can be altered to give a company a particular boost. So, that’s why the companies that sell their ownership to the public needs to get their financial statements audited by a public certified accountant. A certified public accountant (CPA) are licensed through the sate for the same exact reason lawyers and doctors are, so they and protect the public by providing the highest quality of professional service possible. The reason why CPAs are used is because they have no connection with the company and are independent. They have zero financing ties with the company.

Some firms that employ a lot of certified public accountants include Deloitte & Touch, KPMG, and PricewaterhouseCoopers. An accountant with no strings attached or is independent commonly performs an audit, which is evaluating a companies financial statements, product, accounting systems, and records. The main purpose of an audit is to make sure that the financial statements have been properly prepared according to the excepted accounting rules. Keep in mind; since accounting is not a precise science it has room for interpretation according to the GAPP. However, that doesn’t mean that the accountants report should contain substantial errors in the financial report, but more like that for the most report it is reliable for creditors to take a look at. An accountant can make a decision only when the financial statements conform to the guidelines of GAAP. In the past creditors, banks, and investors tend to favor an auditor when they are deciding to invest in a company or give loans, because of their independence. The individualistic audit is an extremely crucial factor in the growth of financial markets internationally.

Also, many organizations can directly or indirectly influence a GAAP. The Financial Accounting Standards Board (FASB) is the most critical body for the development and issuing of rules on accounting practice. The website I previously listed is extremely critical and you can attend seminars online for no cost, and also stay up to date with the rules. This independent body issues the Statements of Financial Accounting Standards. Next, the American Institute of Certified Public Accountants (AICPA) is the official professional association for certified accountants. It’s the largest CPA organization that exists in America and heavily influence accounting practices through its senior committees. The Securities and Exchange Commission is the agency of the federal government that legally has the power to set and execute accounting practices for companies that sell security to the public, and it has a large impact on accounting practice. Next, the governmental accounting standard (GASB) is critical for accounting because its main job is to issue the standards for accounting to the local and state governments in the United States. However, a lot of these organizations are focused on the rules in regulations in the United States.

There are a lot of businesses and accountants internationally so that’s why the International Accounting Standard Board (IASB) was formed. It was approved by more then 25 international agencies. The U.S laws that analyze the revenues for the cost of operating a business can also affect accounting practice. It’s no question that the major provider for income for the government comes from income tax. The income tax rules are heavily applies by the Internal Revenue Service (IRS). Sometimes these rules actually cause a conflict with the accepted rules of accounting. A lot of businesses use accounting practices because it’s a requirement by tax law. Also, companies can use the rules of tax law to their advantage financially. Accounting also has laws of conduct for profession, and one extremely important one is ethics. A nice website dealing with the issues of ethics is ethics.org.

It touches bases on questions that help determine if something is either right or wrong, and is based on moral decisions. Most people are faced with several ethical issues each day and, and some ethical activities could be on the range of illegal. If a business decides to use false or misleading advertising, or to bribe customers into giving them testimonials for a specific product, then they could be acting in an unethical manner. The ethics of a company could also be a result of the employees so that’s why it’s always a good idea to run a background check of who you are hiring, whether it’s online or offline.

Professional ethics is the guidelines that apply to the conduct of individuals of a certain profession. Similar to the ethical actions of a company, the ethical actions of an individual is a decision. As being a member of an organization, accountants have to take the responsibility not only to their customers and employers, but also to the general public to act in the greatest ethical way possible. Accountants are very good at following professional ethics because they are the second professional group as having the largest ethical standards, with clergy being the highest, no surprises about that one. It is important for individuals who decide to become an accountant to have the highest levels of professionalism as possible. To enforce that its prestigious members are following the rules, the AICPA along with each state have adopted some codes of professional conduct that certified public accountants have to follow.

Some simple rules are being responsible to the people that depend on the trust of accountants, such as creditors and investors. When working with people the accountant must act with integrity which means that they are honest, and the individuals gain from the visit with the accountant. The accountant must display objectivity which means that they are intellectually honest, and they must remain independent which means that they must avoid any relationship with the business or individual because it will damage the accountant’s principles.

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